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1099-MISC, Independent Contractors, and Self-Employed

Question: 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?

Answer:

If payment for services you provided is listed in box 7 of Form 1099-MISC (.pdf), 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) (.pdf), Profit or Loss From Business (Sole Proprietorship), or Schedule C-EZ (Form 1040) (.pdf), Net Profit From Business.
  • If you are self-employed, you will also need to complete Schedule SE (Form 1040) (.pdf), 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 are not an employee of the payer, and you are not in a self-employed trade or business, you should report the income on line 21 of Form 1040 (.pdf), U.S. Individual Income Tax Return, and any expenses on Schedule A (Form 1040) (.pdf), Itemized Deductions.

If you believe you may be an employee of the payer, see Publication 1779 (.pdf), 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.

Additional Information:


Category: Interest, Dividends, Other Types of Income
Subcategory: 1099-MISC, Independent Contractors, and Self-Employed

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The OMB number for this study is 1545-1432.
If you have any comments regarding this study, please write to:
IRS, Tax Products Coordinating Committee
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Washington, DC 20224