Taxation of Nonemployees

Taxation of nonemployees typically refers to how independent contractors, freelancers, and other self-employed individuals are taxed instead of traditional employees. Unlike standard employees who have taxes withheld from their paychecks, nonemployees must report their income and pay taxes directly, often quarterly. They are responsible for self-employment taxes, which cover Social Security and Medicare. This means they need to keep track of their earnings and expenses throughout the year to accurately file their tax returns. Understanding these obligations ensures compliance and helps in managing finances effectively.