Which term refers to an individual who is bound by contract to perform a job but is not considered an employee for tax purposes?

The term "independent contractor" refers to an individual who is bound by contract to perform specific tasks or services but is not classified as an employee for tax purposes. This distinction is crucial because independent contractors operate their own businesses and are typically responsible for their own taxes, unlike employees whose taxes are withheld by their employer.

Independent contractors have the freedom to determine how they will perform their work and are often hired for specific projects or time periods. They are not entitled to the same benefits and protections that employees receive, such as health insurance, retirement plans, or paid time off. Understanding this classification is important for both individuals and businesses, as it impacts liability, responsibilities, and tax obligations.

The other terms do not precisely capture this definition. An "employee" is directly tied to an employer and is subject to employment laws. A "subcontractor" typically refers to a contractor who is hired to perform part of the work that another contractor has taken on, while a "freelancer" is often used interchangeably with independent contractor but lacks the formal relationship of a contract that may define the scope of work. Thus, the term that best fits the description given is independent contractor.