The Complete Guide To Taxes For Independent Contractors

Tax season is often the worst time of the year for most people. You have to scramble around trying to figure out stuff like your gross income and tax deductions, and also try to sort through tons of confusing tax forms.

For those who are self-employed or doing freelance work, the process can be even MORE confusing. Chances are, if you fit into the latter category, you’ll need to file something called independent contractor taxes.

Who Needs to Pay Independent Contractor Taxes?

When it comes to who is an independent contractor, the IRS states that “the general rule is that an individual is an independent contractor if the payer has the right to control or direct only the result of the work and not what will be done and how it will be done.”

Put another way, an independent contractor is somebody who gets paid on a “project by project” basis, whereby the employer pays to have a service or good delivered, but they only have a say in the final result and not how to process is carried out.

The first major difference is that in the case of independent contractors, the customer paying you does not deduct any money on their end for your taxes. This means that no medicare taxes, federal taxes, or social security taxes have been taken out before you receive your money.  

How Do Independent Contractor Taxes Work?

Though this may sound like good news, all it means is that you’ll need to pay these at the end of the tax year.

When tax season rolls around, instead of sending you W-2 forms, your “employers” will send you a form 1099-MISC and/or a form 1099-NEC. This will basically be a document listing all of the income the company has paid you over the past calendar year.

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