Audits and tax notices

Nonemployee Compensation

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IRS Definition

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.

More from H&R Block

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.

Learn how to address an IRS CP2000 notice, or get help from a trusted IRS expert.

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