An independent contractor (also known as a freelancer) is a person or entity who agrees to work for another person or entity as a nonemployee. Because of the independent contractor’s status as a nonemployee, the contractor must pay their own Social Security and Medicare (FICA) taxes. And unlike an employer, the person or entity hiring the independent contractor has no obligation to withhold income taxes from the contractor’s fees or to provide the contractor with any employee benefits. It is important for the person or entity who hires a worker to properly classify the worker as an employee or as an independent contractor based on the IRS’s right-to-control test.

In Maine, the classification of a worker as an independent contractor or an employee is an important legal distinction with significant tax and employment implications. Independent contractors in Maine are responsible for paying their own Social Security and Medicare taxes, as they are not considered employees. The hiring entity does not withhold income taxes from payments to independent contractors and is not required to provide them with employee benefits. The classification must be made in accordance with the IRS's right-to-control test, which examines factors such as the degree of control the hiring entity has over the worker, the worker's investment in equipment, the opportunity for profit or loss, and the permanence of the relationship. Maine may have specific guidelines and statutes that further define the criteria for independent contractor status, and it is crucial for hiring entities to correctly classify workers to avoid legal and financial penalties.