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 Nevada, the classification of a worker as an independent contractor or an employee is significant for both tax and employment law purposes. According to the IRS's right-to-control test, an independent contractor is someone who operates under a business arrangement and retains control over how their work is completed, as opposed to an employee who is subject to the employer's direction and control. Independent contractors in Nevada are responsible for paying their own Social Security and Medicare taxes, as they are not considered employees. The hiring entity is not required to withhold income taxes from payments to independent contractors, nor are they obligated to provide benefits such as health insurance, workers' compensation, or unemployment insurance. Misclassification of an employee as an independent contractor can lead to legal consequences, including penalties and back taxes. Therefore, it is crucial for businesses in Nevada to accurately determine the status of the individuals they hire in accordance with federal guidelines and state statutes.