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1099-MISC, Independent Contractors, and Self-Employed

Question: My son is a newspaper carrier. I would like to know if this income is subject to social security and Medicare taxes, and if he must file a Schedule C.

Answer:

As a newspaper carrier, your son may be a direct seller liable to pay self-employment tax.  A direct seller is someone who satisfies the following conditions:

  • The person is engaged in the trade or business of delivering or distributing newspapers or shopping news, including directly related services such as soliciting customers and collecting receipts;
  • Substantially all of the pay for these services (whether or not paid in cash) directly relates to sales or other output rather than to the number of hours worked; and
  • The person performs these services under a written contract that states that the person will not be treated as an employee for federal tax purposes.

Self-employed persons, including direct sellers, report their income on Schedule C (Form 1040) (PDF), Profit or Loss from Business (Sole Proprietorship), or Schedule C-EZ (Form 1040) (PDF), Net Profit from Business.  Schedule SE (Form 1040) (PDF), Self Employment Tax, also must be filed if a person’s net earnings from self-employment are $400 or more.

If your son does not satisfy the conditions above, he may still be liable to pay self-employment tax if he is engaged in a trade or business.  Alternatively, if your son is 18 years old or older and does not satisfy the conditions above, he may be an employee whose wages are subject to income tax withholding, and social security and Medicare taxes.  

For more information on the rules that apply to direct sellers and newspaper carriers and distributors, see Publication 334, Tax Guide for Small Business.  For an explanation of the difference between an independent contractor and an employee, see Publication 1779, Independent Contractor or 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
SE:W:CAR:MP:T:T:SP
1111 Constitution Avenue NW
Washington, DC 20224