Independent contractors and self-employed individuals are not employees, and therefore taxes are not withheld from these individuals.
Independent contractors and self-employed individuals are not employees, and therefore taxes are not withheld from these individuals.
Employers should review the status of the worker to ensure that the individual is properly classified as an independent contractor before entering into this type of relationship. Businesses that use independent contractors are not responsible for any employment taxes for those individuals. These workers on-their-own will pay self-employment (SE) tax on their net earnings. If a self-employed person also has wages from a job, the wages are coordinated with the SE tax so that the wage-base ceiling can be properly applied.
If total payments to such worker in the year are $600 or more, the business must file an annual information return Form 1099 to report the payments to the worker and to the IRS.