What is Independent Contractor?
An independent contractor is a worker who provides services to a business as a separate business, controlling how the work is done and invoicing for it, rather than being an employee. Businesses pay contractors without withholding tax and report payments on Form 1099. Misclassifying an employee as a contractor can lead to back taxes and penalties.
Example
A freelance recruiter who sets her own hours, uses her own tools and works for several clients is more likely a contractor. A worker told when and how to work is more likely an employee. The IRS and state tests decide.
Related
See Form 1099, W-2 vs C2C and Form W-2.
Related terms and guides
Sources
- IRS, Forms and associated taxes for independent contractors, https://www.irs.gov/businesses/small-businesses-self-employed/forms-and-associated-taxes-for-independent-contractors, live official page, linked for readers; link checked 2026-10-31
This is general information, not legal, tax or immigration advice. Rules change and your situation may differ. Consult a licensed attorney or qualified adviser.