The IRS classifies certain categories of workers as " statutory nonemployees " who are treated as self-employed for all federal tax purposes—including Social Security, Medicare, FUTA, and Federal Income Tax—if they meet specific criteria. The two primary categories of statutory nonemployees are qualified real estate agents and direct sellers. To qualify, substantially all of their compensation must be directly related to sales or other output rather than the number of hours worked, and they must perform services under a written contract stating they will not be treated as employees for federal tax purposes. This differs from " statutory employees, " such as full-time life insurance agents (Option C), who are treated as employees for Social Security and Medicare purposes but as independent contractors for most other federal tax rules. Understanding these classifications is vital for correct tax withholding and reporting on Form 1099-NEC versus Form W-2.