What is a 1099 Employee?

May 18, 2023
by workmade
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That's a trick question really. Let us tell you why.
  • "1099 employee" is sometimes used to describe a self-employed individual who does work for a business or an individual.
  • This is a bit of a trick question because if you are self-employed, you're not actually an employee.
  • The reason someone might refer to you or someone else as a "1099 employee" is because they are responsible for filling out a 1099 form for the money they pay you over $600.

The term "1099 employee" is often thrown around to describe someone who fills is a self-employed individual, independent contractor, or freelancer and fills out a 1099 form!

Why do I receive a 1099 form?

When you’re a self-employed individual, you’re responsible for paying your own taxes, including Social Security, Medicare taxes, and the Self Employed Income Tax! When you accept a project as a self-employed individual, you are not eligible for that company’s benefits, such as health insurance, paid time off, or workers' compensation.

At the end of the year, if a company or individual has paid an independent contractor or freelancer more than $600 for their services, they are required to issue a 1099 form to the individual and to the IRS, reporting the total amount paid.

How do I know if I’m a “1099 employee?”

The classification of a worker as an employee or a “1099 employee” is determined by several factors, including the level of control the employer has over the work performed, the degree of independence of the worker, and the nature of the work being performed. Misclassifying a worker can result in legal and financial consequences for the employer. So make sure you know your rights!

Each individual and business tax situation is different and unique so WorkMade does not provide specific tax advice, only supplying general information based on information published by various taxing authorities, which may change over time.

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