Tax Dictionary – Nonemployee Compensation
Nonemployee compensation is fees, commissions, or any other compensation paid by a business to an individual who is not an employee. Nonemployee compensation is reported on Form 1099-MISC.
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Nonemployee compensation (also known as self-employment income) is the income you receive from a payer who classifies you as an independent contractor rather than as an employee. This type of income is reported on Form 1099-MISC, and you’re required to pay self-employment taxes on it. Taxpayers sometimes don’t understand this rule, and end up with a notice from the IRS about income they’ve left off their return.
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