An independent contractor agreement—also known as a 1099 agreement or freelance contract—is a contract between a client willing to pay for the performance of services by a contractor (person, sole-proprietor, or single-member LLC) who is willing to perform the services. Under the Internal Revenue Code (26 U.S.C. §3509), an independent contractor is not an employee, and the client hiring an independent contractor is not responsible for tax withholdings and payment of FICA taxes. An independent contractor agreement should be in writing, and will usually address issues such as the (1) scope of the work (description of the services); (2) terms and length of the project or service; (3) payment details, including fee deposits and billing procedure; and (4) confidentiality, non-solicitation, and dispute resolution clauses.

In Iowa, as in other states, an independent contractor agreement is a key document that outlines the relationship between a client and a contractor who is engaged to perform services. This agreement distinguishes the contractor from an employee, which has significant tax implications under the Internal Revenue Code (26 U.S.C. §3509). In Iowa, the Department of Workforce Development may apply a test to determine the classification of a worker as an independent contractor or employee, which can affect state tax obligations and eligibility for benefits. The agreement should be in writing to ensure clarity on the terms of the relationship, including the scope of work, project duration, payment arrangements, and other important provisions such as confidentiality and non-solicitation. It's important to note that while the client is not responsible for withholding taxes or paying FICA taxes for an independent contractor, the contractor is responsible for paying self-employment taxes and may need to make estimated tax payments throughout the year.