1099: a guide for self-employed people and independent contractors
What the number actually means, and whether 'self-employed' and 'independent contractor' are the same thing.
Leaving a W-2 job to work for yourself is a real milestone. Consultant, driver, creator, technician — running your own work gives you control over your time that an employer cannot.
It also drops you into a different financial world, most visibly at tax time. If 'self-employed', 'independent contractor' and '1099-NEC' are unfamiliar, this is what they mean.
What '1099' actually means
US tax classification splits along two lines.
- W-2 workers Traditional employees. Their employer withholds federal, state and payroll taxes from every paycheck.
- 1099 workers Self-employed people, independent contractors and business owners providing services to clients rather than working as employees.
As a 1099 worker, your clients withhold nothing. You receive a Form 1099-NEC from any client who paid you $2,000 or more in the calendar year — a threshold that rose from $600 for payments made from 2026, and which is adjusted for inflation after that — and you are responsible for filing and paying your own tax.
Income from clients who paid you less than that is still income. Nobody files a form about it, and it still belongs on your return.
Self-employed, or independent contractor?
The terms get used interchangeably, and they emphasise slightly different things.
- Independent contractor Usually someone contracting to provide specific services to companies or clients — a developer building a site for a firm, a designer producing brand assets.
- Self-employed The broader term: anyone earning from their own labour or business without a traditional employer, including drivers, online sellers and consultants.
Under IRS rules both generally report business income the same way, through Schedule C.