CA Real Estate
California Real Estate Law Questions? Get Answers Online Now.
There are a list of factors to determine whether or not someone you hire is an employee (Form W-2) or independent contractor (Form 1099). It's difficult to fully advise you by writing without fully understanding the facts and circumstances of your working relationship with the loan officer. The fact that the loan officer works in their home and is paid a commission on loans is not enough information.
The National Association of Realtors recently posted an article about the issue: http://www.realtor.org/law-and-ethics/independent-contractor-status-in-real-estate-2015-white-paper
Here is a link to the California information about the issue: http://www.taxes.ca.gov/iCorE.bus.shtml
Here is a link to the IRS information about the issue: http://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/Independent-Contractor-Self-Employed-or-Employee
As the taxpayer, you would file based on the status that you want to give to the loan officer. However, if you classify a loan officer as an independent contractor, and either the IRS or California EDD determine that the loan officer is actually an employee, then you can be subject to penalties and interest. There is Internal Revenue Code section 3508 regarding independent contractor status of real estate agents: https://www.law.cornell.edu/uscode/text/26/3508
Do you have any additional questions that I can answer? I want for you to be satisfied with my answer so that you can rate me on the top right hand side of your window.