Legal Term
freelancer tax withholding self-employment agreement
Legal Definition
A contractual arrangement where a service provider is engaged as an independent contractor, and the hiring party does not withhold income taxes, Social Security, Medicare, or other payroll deductions, thereby assigning all tax obligations, including self-employment taxes, to the contractor.
In Plain English
An agreement where you work for yourself and the person paying you doesn't take out any taxes—you're responsible for paying all taxes on your earnings, including the self-employment tax.
Example in a Contract
Tax Responsibility Clause: 'The Service Provider acknowledges and agrees that they are an independent contractor and not an employee of the Client. The Client shall not withhold or pay any federal, state, or local income taxes, Social Security, Medicare, unemployment insurance, or other statutory deductions from the fees paid to the Service Provider. The Service Provider shall be solely responsible for all tax liabilities arising from this Agreement, including but not limited to self-employment tax, and shall file all required tax returns and make timely payments to the appropriate authorities.'
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