1099 Independent Contractors vs. W-4

During the course of interviewing new freelance candidates here at Direct Marketers on Call, I am often asked if it is possible to be considered a 1099 Independent Contractor versus being placed on DMOC or the Client’s payroll.

The following information is provided by the IRS and their 20-Point Check List. For those unfamiliar with what a 1099 Independent Contractor is, it is a tax-related term used to refer to the type of worker that contracts out his or her services to a business or businesses. The “1099″ refers to the Internal Revenue Service (IRS) form that an independent contractor receives stating his or her income. A 1099 contractor/independent contractor is not an employee of the company where he or she works, but instead is considered to be self-employed.

As a 1099 Independent Contractor, one must pay his/her own income, city, state, federal, Medicare and social security taxes. He/she is required to make quarterly installments against his or her projected tax responsibility for the year.

So, in answer to this Independent Contractor question, the answer is “no”. There are rules used by the IRS to determine if you qualify as an Independent Contractor. Some rules are:

· An Independent Contractor is not required to spend the majority of the assignment on premise – our freelancers are.

· Most Independent Contractors are paid by the job or project not by the hour or day – our freelancers are.

· If the employer has the right to determine the hours worked, then he/she is not an Independent Contractor.

I hope this helps in understanding why you, as a freelancer, need to be on DMOC or our client’s payroll. And think of it this way, it’s less paperwork (tax filings)!

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Business Financial Services

1099 Independent Contractors vs. W-4