I joined a consulting firm as an Independent contractor to work on one of their projects that they were handling for a well known MNC roughly one month ago. I was hired as an independent contractor so I guess I would have to pay all taxes myself.

But when I received my first paycheck, I see that I had been deducted state, federal and FICA tax just like a regular employee. Could somebody provide a remedy for this. (BTW, I like being taxed like this, saves me a lot of headache , but I would like to know if there are any implications?)

(background : US, Virginia, started job in first week of July and received paycheck on 1st August, single, hourly independent contractor)


  • 3
    Talk to personnel. This sounds like a possible paperwork error. If you're supposed to be a1099 and a form was missed you might have been entered into their system as a w2 employee instead.
    – pojo-guy
    Aug 13, 2017 at 4:40
  • 1
    Are you receiving benefits? Did you fill out a W-2? Did you send them an invoice for the number of hours worked or did you complete a time sheet? Aug 13, 2017 at 11:58

1 Answer 1


tl;dr: The most important question is: Did you fill out a W4 form or W9 form? If you filled out a W4 form you will be a W2 employee. If you filled out a W9 form you will either be 1099 or Corp-to-Corp.

Whenever you work for an agency or a firm that staffs you at another client, you will be called a contractor from the client's point of view, but from the agency's point of view you will typically be one of three things:

  1. W2 Employee
  2. 1099 "Employee"
  3. Corp to Corp (C2C)

Nowadays, most larger agencies prefer options 1 and 3. 1099 is generally frowned upon because during an audit, both the IRS and States occasionally wave their magic wand and declare the companies have to pay taxes on all 1099 employees as if they were W2. This fear causes many companies to shy away from 1099.

The good news is, if you negotiated an hourly rate that you thought was going to be for 1099 (or even C2C), but now have found out that you're receiving that same rate as a W2 employee, then you're most likely better off now. You will save 7% on FICA taxes, and also don't have to worry about obtaining your own insurance.

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