What Form Do Independent Contractors Fill Out?

Independent contractors, who are self-employed, have distinct tax responsibilities compared to traditional employees. Unlike employees who receive a Form W-2, contractors report their own income and expenses to the IRS. This process involves several key tax forms.

The W-9 Form

The Form W-9, “Request for Taxpayer Identification Number and Certification,” is completed by independent contractors for their clients. It allows clients to collect the contractor’s correct Taxpayer Identification Number (TIN) and other certification information. Clients use this information to prepare tax documents like Form 1099-NEC, which reports payments to non-employees.

When filling out a W-9, an independent contractor provides their full legal name, business name (if applicable), and current mailing address. They also indicate their tax classification, such as individual/sole proprietor, C corporation, S corporation, partnership, or Limited Liability Company (LLC). The most important piece of information on the W-9 is the Taxpayer Identification Number, which can be either a Social Security Number (SSN) for individuals or an Employer Identification Number (EIN) for businesses.

Clients typically provide the W-9 form to the contractor, often at the start of a business relationship. It can also be downloaded from IRS.gov. The completed W-9 is submitted by the contractor to the client, not to the IRS. This ensures the client has necessary details for accurate payment reporting.

The 1099-NEC Form

Independent contractors receive Form 1099-NEC, or “Nonemployee Compensation,” from their clients, rather than filling it out themselves. This form is used by businesses to report payments of $600 or more made to non-employees for services performed during the tax year. The information on the 1099-NEC directly relates to the details provided by the contractor on the W-9.

The client, as the payer, is responsible for issuing the 1099-NEC to both the independent contractor and the IRS. This form includes the payer’s name, address, and Taxpayer Identification Number, along with the recipient (contractor)’s name, address, and TIN. Crucially, Box 1 on the 1099-NEC displays the total amount of nonemployee compensation paid to the contractor during the year.

Payers are required to issue 1099-NEC forms to independent contractors by January 31st of the year following the payment. This deadline ensures contractors receive the necessary information in time to prepare their own tax returns. Independent contractors then use the amount reported in Box 1 of the 1099-NEC to accurately report their gross income when filing their personal tax returns.

The Schedule C Form

Independent contractors prepare and file Schedule C (Form 1040), “Profit or Loss From Business (Sole Proprietorship),” as part of their personal income tax return. This form reports business income and expenses, calculating net profit or loss from self-employment.

To complete Schedule C, contractors report gross receipts or sales, including all income earned. After listing gross income, various business expenses are itemized to determine net profit or loss. Common deductible expenses include advertising, vehicle mileage, office supplies, professional development, and insurance premiums. Accurate records for all income and expenses are essential.

The calculated net profit or loss from Schedule C is then transferred to Form 1040, specifically flowing through Schedule 1, which summarizes additional income and adjustments. A net profit increases the contractor’s adjusted gross income and overall tax liability, while a net loss can reduce it. Schedule C also provides the basis for calculating self-employment taxes for Social Security and Medicare, which are reported on Schedule SE.