What IRS form is used for independent contractors and freelancers?

The appropriate form used for independent contractors and freelancers is the Form 1099-NEC. This form is specifically designed for reporting payments made to non-employees, who are typically independent contractors, freelancers, or any other workers who provide services but are not classified as employees of the business.

When a business pays an independent contractor $600 or more within a tax year, it must issue a Form 1099-NEC to report those earnings to the IRS. This form includes important details such as the amount paid to the contractor and their tax identification number, ensuring that the contractors can accurately report their income during tax filing.

In contrast, Form W-4 is used by employees to inform their employers of their tax withholding preferences, and Form W-2 is used to report wages, tips, and other compensation paid to employees along with the taxes withheld. Form 941, on the other hand, is used by employers to report federal income tax, Social Security tax, and Medicare tax withheld from employee wages, which doesn’t pertain to independent contractors.