Which tax form is typically issued to independent contractors?

• A. W-2 tax form.
• B. 1099 tax form.
• C. 1040 tax form.
• D. W-4 tax form.

Answer: (B)

Independent contractors are treated as self-employed, so businesses report payments to them using an information return that goes to both the contractor and the IRS. The form used for nonemployee compensation is Form 1099-NEC. This form is issued when you pay a contractor $600 or more in a year, and the contractor then uses it to report income on their tax return (typically on Schedule C with self-employment tax via Schedule SE). In contrast, a W-2 is for employees’ wages, the 1040 is the individual income tax return, and the W-4 is the employee withholding form.