IRS 1099-MISC Form for Contract Workers
Contract workers, or freelancers, are workers who are hired on a project-by-project basis. The IRS 1099-MISC form is used by employers to document the earnings of contract workers.
More and more businesses are hiring contract workers because their costs are generally lower than W-2 employee costs.
This is because contract workers’ earnings do not require deductions of social security, income and state tax, unemployment, health insurance, or any other type of deferred compensation. Contractors are required to calculate any tax deductions and pay any taxes owed to the IRS on their own.
At the end of the tax year, the 1099-MISC form is sent by employers to any contractors hired during the year, and it is also submitted to the IRS for income tracking purposes.
Some examples of workers that would receive a 1099 form at the end of the tax year include freelance writers, artists, contract IT specialists, temporary laborers, and more.
The 1099-MISC form is the most popular form to report contract worker earnings. The other variations of the 1099 form are used to show interest and other types of earnings.