Am I an employee, self-employed, or an independent contractor?
It depends on how you're paid and the type of year-end form you receive from the person or business that paid you.
If you're an employee:
You received a W-2 from your employer (usually in January or early February).
Your employer took Social Security and Medicare taxes (FICA) out of your paycheck each payday.
If you’re an independent contractor:
You received a 1099-NEC or 1099-MISC.
The payments you received were for the full amount you earned, nothing was deducted for FICA.
If you're an independent contractor, you're considered self-employed and responsible for reporting your earnings and paying your taxes directly to the IRS. You should report your net income or losses either on a Schedule C or as other income on Form 1040.
You may be self-employed if you're an individual who:
Is the sole proprietor of an unincorporated business
Works as an independent contractor, consultant, or freelancer
Is a member of a business partnership
Owns or is part of a limited liability company (LLC)
Earns income through investments
Earns income through rental property
The key to determining if you're self-employed is to assess whether you're in business for yourself or are the owner of your own business. This includes any part-time businesses or private "side jobs" where you're performing services in addition to a regular job or business.
You may not think of yourself as running a business, but you're considered self-employed if you engage in business-like activities—meaning any activity where you intend to make a profit (even if you operate at a loss), have regular transactions or production of income, or make ongoing efforts to sustain, grow, or further the interests of your business.
Even if you don't receive a 1099-NEC, 1099-MISC, or 1099-K, you're still responsible for reporting all your income and expenses from self-employment on your tax return. We'll help you by asking simple questions about your self-employment income and filling out the right tax forms for you during your filing process.
