According to IRS guidelines, an independent contractor must be covered by what?

An independent contractor is not typically covered by unemployment insurance under IRS guidelines. Unemployment insurance is generally designed for employees who lose their jobs through no fault of their own, and it provides financial assistance to eligible workers. Independent contractors, on the other hand, operate as self-employed individuals and do not have the same protections or benefits associated with traditional employment.

However, it’s important to understand the context of what an independent contractor is responsible for. They are typically tasked with managing their own business expenses and risk and may choose to carry different types of insurance based on their individual needs and the nature of their work. For example, while liability insurance and health insurance are valuable for managing personal and professional risks, the requirement for these insurances generally falls to the contractor rather than being mandated by the IRS.

Workers' compensation insurance is specific to employee coverage and protects against job-related injuries or illnesses, and independent contractors usually do not fall under this category unless otherwise stated in their contracts.

In summary, when it comes to independent contractors and IRS guidelines, they primarily operate independently, which means they are seldom required to carry unemployment insurance. Their choices regarding insurance coverage are largely determined by their specific circumstances and the nature of their work.