Independent Contractor

What Is an Independent Contractor?

An independent contractor is a self‑employed professional. Unlike employees, contractors control how they complete the work rather than receiving detailed direction from the payer—only the final result is specified. Consequently, the Internal Revenue Service (IRS) considers them self‑employed and responsible for their own Social Security, Medicare, and income tax payments:contentReference.

How Does an Independent Contractor Pay Taxes?

Independent contractors must handle their tax obligations differently from employees. Key differences include:

• Reporting self‑employment income and deductions on Schedule C (Form 1040):contentReference.
• Calculating and paying self‑employment tax—Social Security and Medicare—using Schedule SE:contentReference.
• Making quarterly estimated tax payments using Form 1040‑ES to cover income, Social Security, and Medicare taxes:contentReference.
• Receiving Form 1099‑MISC or 1099‑NEC from clients instead of a W‑2, since there is no employee withholding.