No — 1099 independent contractors do not need to fill out an I-9. USCIS specifically exempts independent contractors from Form I-9, and the business paying them is not required to verify their identity or work authorization through the form.1U.S. Citizenship and Immigration Services. Exceptions That said, you still have paperwork to collect from a contractor, and the exemption has real limits when it comes to knowing whether the person is authorized to work in the United States.
Why the I-9 Exemption Applies to Contractors
Form I-9 is built around the employer-employee relationship. A true independent contractor operates as a separate business, so there is no employer on the paying side to verify anything. Under federal immigration regulations, an independent contractor is someone who carries on an independent business, agrees to complete a project using their own methods, and answers to the hiring party only for the end result, not for how the work gets done. Supporting factors include supplying your own tools, offering services to the general public, working for multiple clients, having an opportunity for profit or loss, and setting your own schedule.2eCFR. 8 CFR 274a.1 – Definitions
If the contractor brings on their own workers to help complete the job, the contractor is responsible for completing Form I-9 for those workers. The company that awarded the contract has no obligation to verify the contractor’s staff.3U.S. Citizenship and Immigration Services. 2.0 Who Must Complete Form I-9
What to Collect Instead of a Form I-9
Before you make any payments to a contractor, get a completed Form W-9. The W-9 captures the contractor’s legal name, business name if different, federal tax classification, address, and taxpayer identification number (either a Social Security number or an employer identification number). That information is what lets you report payments correctly at year end.4IRS.gov. Form W-9 Request for Taxpayer Identification Number and Certification
If you pay a contractor $600 or more during the tax year, you must file Form 1099-NEC with the IRS. The filing deadline is generally January 31 of the following year.5Internal Revenue Service. What Businesses Need to Know About Reporting Nonemployee Compensation and Backup Withholding to the IRS
When a contractor refuses to give you a taxpayer identification number, or the one they give is incorrect, you are required to withhold 24 percent of each payment and send it to the IRS as backup withholding. By signing the W-9, the contractor certifies that their TIN is correct and that they are a U.S. person not subject to backup withholding.6Internal Revenue Service. Backup Withholding
The Exemption Is Not a Loophole for Unauthorized Workers
The I-9 exemption does not let a business use a contract to hire someone it knows cannot legally work in the United States. Federal regulations make it illegal to use a contract or subcontract to obtain the labor of a worker you know is unauthorized. A business that does so is treated as if it had directly hired the unauthorized worker.7eCFR. 8 CFR Part 274a – Control of Employment of Aliens – Section 274a.5
“Knowing” here covers both actual knowledge and constructive knowledge. Constructive knowledge means you had enough information that a reasonable person would have recognized the worker was unauthorized. Red flags include government notices about suspect documents, tips from other workers combined with Social Security no-match letters, or a contractor presenting a different Social Security number than the one originally provided.
Under the Immigration and Nationality Act, civil penalties for a first offense of knowingly hiring an unauthorized worker range from $250 to $2,000 per worker at the statutory base level. A second offense runs $2,000 to $5,000 per worker, and a third or subsequent offense reaches $3,000 to $10,000 per worker. Those base numbers are adjusted upward for inflation each year, so actual fines are higher today. A pattern or practice of violations carries criminal penalties of up to $3,000 per unauthorized worker and up to six months in prison.8Office of the Law Revision Counsel. 8 USC 1324a – Unlawful Employment of Aliens
Make Sure the Worker Really Is a Contractor
Whether someone qualifies as an independent contractor is a factual question that depends on the real working relationship, not just what the contract says. Multiple federal agencies apply their own tests, and all of them look past labels.
The Immigration Test
For Form I-9 purposes, 8 CFR 274a.1(j) focuses on whether the worker carries on an independent business, completes the project using their own methods, and is subject to the hiring party’s control only as to results. Supporting factors include supplying tools and materials, offering services to the general public, working for multiple clients, having an opportunity for profit or loss, investing in work facilities, and setting your own schedule.2eCFR. 8 CFR 274a.1 – Definitions
The IRS Common-Law Test
The IRS groups its factors into three categories. Behavioral control asks whether the company directs what work is done and how it is done. Financial control looks at how the worker is paid, whether expenses are reimbursed, and who provides tools and supplies. The type-of-relationship category examines written contracts, employee-type benefits like insurance or a pension, and whether the work is a key aspect of the business.9Internal Revenue Service. Independent Contractor (Self-Employed) or Employee?
The Department of Labor Economic Reality Test
The Department of Labor proposed a new rule in February 2026 that would apply an economic reality test under the Fair Labor Standards Act. The proposed test identifies two core factors: the nature and degree of the worker’s control over the work, and the worker’s opportunity for profit or loss based on personal initiative or investment. When those factors point in different directions, additional factors come into play, including the skill required, the permanence of the relationship, and whether the work is part of an integrated unit of production.10Federal Register. Employee or Independent Contractor Status Under the Fair Labor Standards Act, Family and Medical Leave Act, and Migrant and Seasonal Agricultural Worker Protection Act Because this is a proposed rule, it is not yet final, but it signals the direction of federal enforcement.
Misclassifying an employee as an independent contractor to sidestep I-9 requirements can trigger consequences from more than one agency at a time. Beyond immigration penalties, the IRS can assess back employment taxes, and the Department of Labor can pursue unpaid overtime and minimum wage claims.
Federal Contracts Can Change the Picture
E-Verify, like Form I-9, generally does not apply to independent contractors. A self-employed contractor does not enroll in E-Verify or create a case for themselves, and the hiring company cannot create one for them.11E-Verify. 6.3 Independent Contractors and Self-Employed Individuals
One exception matters if you work on federal contracts. When a prime contractor’s federal contract contains the FAR E-Verify clause, the requirement flows down to subcontractors whose subcontract covers services or construction, has a value above $3,500, and involves work performed in the United States. In that situation, the subcontractor must use E-Verify for its own employees. A self-employed independent contractor with no employees still does not complete a Form I-9 or enroll in E-Verify on their own behalf.12E-Verify. Subcontractors, Independent Contractors, and Affiliates
Records to Keep for a Contractor
There is no I-9 to retain, but you should keep a file that supports the contractor classification if it is ever questioned. Hold onto the signed contract, the completed W-9, copies of any 1099-NEC forms you filed, and documentation showing the contractor operates independently. Useful evidence includes proof they serve other clients, records showing they provide their own equipment, and any paperwork for their own business entity. If an auditor later challenges whether the person should have been treated as an employee, those records are what protects you.