Final answer:
An independent contractor makes estimated tax payments throughout the year and can utilize tax deductions related to their business expenses. They must pay both the employee and employer portions of payroll taxes for Social Security and Medicare, and not paying incometax is illegal.
Step-by-step explanation:
Among the given options, the correct answer is that an independent contractor makes estimated tax payments. This means they are responsible for paying taxes on their income throughout the year, rather than having taxes withheld by an employer. An independent contractor is able to use various tax deductions that relate to their business expenses. It's mandatory for independent contractors to pay income taxes; not paying taxes is against the law. Unlike traditional employees, independent contractors do not usually have taxes withheld from their paychecks by clients.
As a member of the 1099 or gig economy, an independent contractor is both the employer and employee, which means they must pay both portions of payroll taxes. This refers to contributions towards Social Security and Medicare. The self-employment tax covers the independent contractor's contribution to these social programs.