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Why doesn't an employer have to withhold taxes from an independent contractor?

Why doesn't an employer have to withhold taxes from an independent contractor?

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Answer #1

An employer doesnot have to withhold the taxes from an independent contractor. If you are a contractor or owner who provide services to businesses then you are generally consider as self employed. You must withhold income taxes, withhold and pay Social Securities and Medical taxes and pay unemployement taxes on wages paid to employees. They do not generally have to withhold or pay any taxes on payment to independent contractors.

When an employer fails to deduct the appropriate tax amounts from payments to employees , then the employer is liable for a tax penalty equal to 10% of the amounts that should have been deducted or withheld.

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