Fundamental Payroll Certification (FPC) Practice Exam

An Independent Contractor typically receives a 1099 Form at the end of the year because this form is specifically designed for reporting income earned by self-employed individuals and contractors. The 1099 Form reflects the total amount that the contractor was paid by a client or business throughout the year, provided the payment exceeds a certain threshold, often set at $600. This allows the contractor to report their income accurately when filing their tax returns.

In contrast, a W2 Form is used for employees who receive wages or salaries, along with tax withholdings from their paychecks. Pay stubs are documents provided for each paycheck, detailing earnings and deductions, but they are not year-end summary documents. A tax return is the form filed with the IRS to report all income earned, but it is not a document that contractors receive from clients; rather, it is the contractor's own report of their financial activity for the year. The 1099 Form is the correct document to signify income specifically for independent contractors.