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You do not generally have to withhold or pay any taxes on payments to independent contractors unless you are not provided with a required taxpayer identification number or are instructed to withhold by the Internal Revenue Service.
This is known as self-employment tax. In some cases, they may be able to deduct the employer-equivalent portion of the tax on their annual return.
An employer generally must withhold Social Security and Medicare taxes from employees wages and pay the employer share of these taxes. Social Security and Medicare taxes have different rates and only the social security tax has a wage base limit.
What Is the 1099 Form Used for? The 1099 form is used to report non-employment income to the Internal Revenue Service (IRS). Businesses are typically required to issue a 1099 form to a taxpayer (other than a corporation) who has received at least $600 or more in non-employment income during the tax year.
Some of the disadvantages of being a 1099 employee include you must fund 100% of your Medicare and Social Security taxes, health insurance, retirement savings, as well as any tools and equipment needed for your profession.
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Generally, you do not have to withhold or pay any taxes on payments to independent contractors.
Generally, employers must withhold income taxes, withhold and pay Social Security and Medicare taxes, and pay unemployment tax on wages paid to employees. Business owners do not generally have to withhold or pay any taxes on payments to independent contractors.
How is an independent contractor paid? Obtain the independent contractors Form W-9, Request for Taxpayer Identification Number and Certification. Provide compensation for work performed. Remit backup withholding payments to the IRS, if necessary. Complete Form 1099-NEC, Nonemployee Compensation.

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