1099 contractor

The name comes from the information return used to report that pay. The person typically invoices, sets more of their own hours, and handles their own tax. Calling someone a 1099 contractor does not settle the legal question. If the hiring company controls when, where, and how the work is done, the person may still be an employee.

Key takeaways

• Self-employed pay route: A 1099 contractor is paid outside payroll; the hiring company reports pay on Form 1099-NEC rather than a W-2.
• Contractor handles own tax: The worker invoices, sets more of their own schedule, and is responsible for their own income and self-employment tax.
• Label does not settle classification: Calling someone a 1099 contractor does not make them one — the actual working relationship determines employee vs contractor status.
• Misclassification risk: If the hiring company controls when, where, and how work is done, the person may legally be an employee regardless of the contract label.

Common questions

What is a 1099 contractor?

A 1099 contractor is a US term for a self-employed worker paid outside payroll, rather than as a W-2 employee. The label comes from the tax form used to report that pay.

How does a 1099 contractor differ from a W-2 employee?

A 1099 contractor is paid outside payroll, handles their own tax, and typically sets more of their own hours. A W-2 employee is paid through payroll with tax withheld and works under employer direction. The form reflects how pay is reported, but the actual degree of control over the work — not the label — determines the correct classification.