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What Is a 1099 Contractor?

A 1099 contractor is usually also known by another name – an independent contractor. The term 1099 contractor is a legally accepted term used in the United States. It actually has a tax-related origin as it refers to the type of worker that hires out his services to a business or client. The number “1099” refers to a particular form from the Internal Revenue Service or IRS. This form is received by the independent contractor and indicates his income from a particular business in a specific tax year. To explain it simply a 1099 contractor is not considered an employee of the business who hired him. He is, instead, considered an independent contractor whose status is self-employed.

A 1099 contractor enjoys a lot of freedom in his work, but there are also some downsides to this kind of work arrangement. A 1099 contractor is given a 1099 form if he makes more than 600 US dollars. Since he is self-employed – and technically both the employer AND employee – he has the responsibility of withholding his taxes and paying the Social Security and Medicare taxes himself. This responsibility means that the 1099 contractor has to be diligent with his bookkeeping and save all of the important receipts for his business to avoid problems with his taxes. Employees do not have this problem because the employer usually has a person who does this task in behalf of the employees.

A 1099 contractor enjoys more flexibility in time compared to an employee and is not held back by a rigid work schedule. On the other hand, he does not get to enjoy such benefits as time-off with pay.

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