1099-MISC, Independent Contractors, and Self-Employed
I received a Form 1099-MISC instead of a Form W-2. I’m not self-employed and do not have a business. How do I report this income?
If payment for services you provided is listed in box 7 of Form 1099-MISC, Miscellaneous Income, the payer is treating you as a self-employed worker, also referred to as an independent contractor.
- You do not necessarily have to have a business for payments for your services to be reported on Form 1099-MISC. You may simply perform services as a non-employee.
- The payer has determined that an employer-employee relationship does not exist in your case.
If you were not an employee of the payer, where you report the income depends on whether your activity is a trade or business. You are in a self-employed trade or business if your primary purpose is to make a profit and your activity is regular and continuous.
- If you are in a self-employed trade or business, you must include payments for your services on Schedule C (Form 1040), Profit or Loss From Business (Sole Proprietorship), or Schedule C-EZ (Form 1040), Net Profit From Business (Sole Proprietorship).
- If you are self-employed, you will also need to complete Schedule SE (Form 1040), Self-Employment Tax, and pay self-employment tax on your net earnings from self-employment of $400 or more.
- There is no withholding of tax from self-employment income. As a self-employed individual, you may need to make estimated tax payments during the year to cover your tax liabilities.
If you believe you may be an employee of the payer, see Publication 1779, Independent Contractor or Employee, for an explanation of the difference between an independent contractor and an employee. For more information on employer-employee relationships, refer to Chapter 2 of Publication 15, (Circular E), Employer’s Tax Guide, Chapter 2 of Publication 15-A, Employer’s Supplemental Tax Guide, and Tax Topic 762, Independent Contractor vs. Employee.
- Publication 505, Tax Withholding and Estimated Tax
- Tax Topic 407 – Business Income
- Publication 17, Your Federal Income Tax for Individuals
- Our webpage on Independent Contractor vs Employee
Question: I received a Form 1099-MISC with an amount in box 7 for nonemployee compensation. What forms and schedules should I use to report income earned as an independent contractor?
- Independent contractors report their income on Schedule C (Form 1040), Profit or Loss from Business (Sole Proprietorship). However, you may qualify to use Schedule C-EZ (Form 1040), Net Profit from Business (Sole Proprietorship).
- Also file Schedule SE (Form 1040), Self-Employment Tax, if net earnings from self-employment are $400 or more. This form allows you to figure social security and Medicare tax due on your net self-employment income.
- You may need to make estimated tax payments. Refer to Form 1040-ES, Estimated Tax for Individuals, for more details on who must pay estimated tax. If you need to make estimated tax payments and do not pay them timely, you may also need to fileForm 2210, Underpayment of Estimated Tax by Individuals, Estates & Trusts.
- Publication 334, Tax Guide for Small Business
- Instructions for Schedule SE (Form 1040), Self-Employment Tax
- Instructions for Schedule C (Form 1040), Profit or Loss From Business
- Instructions for Form 2210, Underpayment of Estimated Tax by Individuals, Estates, and Trusts
- Do You Have to Pay Estimated Tax?
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