What is typically not withheld from payments to independent contractors by employers?

Employers typically do not withhold federal income tax from payments made to independent contractors. Unlike employees, where employers are required to deduct federal taxes from wages, independent contractors receive their payments full and are responsible for reporting their income and paying their taxes themselves. This is because independent contractors are treated as self-employed individuals by the Internal Revenue Service (IRS), meaning they handle their own tax obligations, including federal income tax.

In contrast, employers are generally required to withhold certain taxes from employee wages, including state taxes, Social Security taxes, and payroll taxes. These withholdings represent a system designed to ensure that employees meet their tax obligations over the course of the year through regular deductions from their salaries. Independent contractors, since they are not considered employees, operate independently in managing their own taxes.