TC business setup · worker classificationIs a transaction coordinator an employee or an independent contractor?
Real estate agents have a special federal rule: a licensed real estate agent is not treated as an employee for federal tax purposes if substantially all pay is tied to sales or other output rather than hours, and a written contract says the agent will not be treated as an employee (26 U.S.C. 3508). Most transaction coordinators are not licensed agents, so that rule does not cover them – and a licensed TC paid by the hour does not meet it either. For everyone else the IRS looks at the whole relationship under the common-law rules: behavioral control (who decides what is done and how), financial control (how the worker is paid, who pays expenses and provides tools) and the type of relationship (contracts, benefits, permanence, whether the work is a key part of the business). No single factor decides. Working remotely does not change it: a remote worker is an employee if the payer has the right to control what is done and how.
The IRS common-law factors
Behavioral
Does the brokerage or agent control, or have the right to control, what the TC does and how?
Financial
How is the TC paid (per file or per hour)? Are expenses reimbursed? Who provides the software and tools? Does the TC work for other clients?
Relationship
Is there a written contract? Benefits like pension, insurance or vacation pay? Is it ongoing, and is the work a key part of the business?
Facts that point toward an independent TC
- A per-file or flat fee, invoiced by the TC.
- Several agents or brokerages as clients, and the TC sets their own process and hours.
- The TC pays for their own software, phone and E&O insurance.
- A written service agreement – it helps, though the facts decide.
Facts that point toward an employee
- Set hours, required office presence or the brokerage's own procedures for how each task is done.
- Paid by the hour, with expenses reimbursed and tools provided.
- Works only for one brokerage, open-ended, with employee-type benefits.
- A licensed TC paid hourly does not fit the qualified real estate agent rule (§3508).
Questions TCs and brokers ask
Are transaction coordinators independent contractors?
Often, but not automatically. The statutory nonemployee rule covers licensed agents paid by output under a written contract (26 U.S.C. 3508); for an unlicensed TC, the IRS common-law factors decide.
Does working remotely make a TC a contractor?
No. A remote worker is an employee under the common-law rules if the payer can control what will be done and how (irs.gov).
Does a written independent contractor agreement settle it?
It is one factor under the type of relationship; the IRS weighs the whole relationship, and no single factor decides.
Related guides
ClosingCode's one-click TC ↔ agent service agreement sets out your fee schedule per file – the kind of written terms an independent business works under.
Start free trialSources (read October 25, 2026): 26 U.S.C. 3508 (govinfo); irs.gov "Independent contractor (self-employed) or employee?".
General information, not tax or legal advice. ClosingCode is software; it is not a tax preparer, CPA or law firm. State rules on taxes and worker classification can differ. This guide is not a substitute for the advice or services of an attorney.