A 1099 contractor is a self-employed worker who provides services to clients without being on their payroll. They receive Form 1099-NEC instead of a W-2 at tax time and are responsible for their own taxes, including self-employment tax.
A 1099 contractor — formally called an independent contractor — is someone who works for clients on a project or contract basis rather than as a full-time employee. The name comes from Form 1099-NEC, which clients are required to file with the IRS for any contractor they paid 00 or more during the calendar year. As a 1099 contractor you are considered self-employed. This means you are responsible for paying your own income tax, Social Security, and Medicare taxes. The combined self-employment tax rate is 15.3% on top of regular income tax, which is why contractors typically charge higher rates than salaried employees doing comparable work. The IRS has specific criteria for determining whether someone is an employee or an independent contractor. The key factors involve how much control the company has over how the work is done, whether the tools and workspace are provided, and whether the relationship is ongoing. Misclassifying employees as contractors is a serious legal issue for both parties.
1099 contractors invoice their clients for services rendered rather than receiving a paycheck. This means maintaining professional invoicing practices is not optional — it is how you get paid and how you document your income for tax purposes.
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