Contractor Pay Stub vs Employee Pay Stub: What Is the Difference?
By the Check Stub Generator editorial team | Updated September 29, 2026 | 9 minute read
The short answer
An employee pay stub shows gross pay and every tax the employer withheld, such as federal income tax, Social Security and Medicare. A contractor pay stub shows only what you earned, because no one withholds tax from contractor pay. Contractors pay their own taxes, including self employment tax of 15.3 percent. Which stub you need depends on whether you get a W2 or a 1099.
You get paid. But how you get paid changes everything about your paperwork.
If you are an employee, your boss takes out taxes and hands you a stub. If you are a contractor, you get the full amount, and the tax bill comes later. The two stubs look alike at a glance. They tell very different stories.
This guide shows you the difference line by line. You will see a side by side example with real numbers, learn how to tell which group you belong to, and find out how to make the right stub when you need one.
What each stub is
The employee pay stub
An employee pay stub comes with every paycheck. It lists gross pay, then every tax and deduction the employer took out, then net pay. It also shows year to date totals. The employer sends the taxes to the government for you and reports them on a W2 after the year ends. Many states also require employers to give the stub. A plain look at every part of a stub walks through the layout.
The contractor pay stub
A contractor is paid for a job or a project, usually against an invoice. No one withholds tax. So a contractor stub is simply an earnings statement. It shows who paid, when, and how much, with no tax lines taken out.
Here is a surprise for many people. No federal law forces a client to give a contractor a stub. Contractors usually get a 1099 NEC form once a year instead. That is why many contractors make their own stubs to keep a clean record of income.
Side by side comparison
| Question | Employee | Contractor |
|---|
| Year end tax form | W2 | 1099 NEC, when payments reach the reporting limit |
|---|
| Who withholds income tax | The employer, based on your W4 | No one |
|---|
| Social Security and Medicare | You pay 7.65 percent. The employer pays a matching 7.65 percent. | You pay both halves, called self employment tax, which is 15.3 percent |
|---|
| How you pay tax | Taken from each paycheck | Estimated payments each quarter, plus your yearly return |
|---|
| Is a stub required | Often, by state law | No federal rule |
|---|
| Minimum wage and overtime | Covered | Not covered |
|---|
| Lines on the stub | Gross pay, federal tax, state tax, Social Security, Medicare, deductions, net pay | Gross pay and payment details, with no withholding lines |
|---|
| Extra paper lenders ask for | Recent stubs and a W2 | Stubs, 1099 forms, bank statements and tax returns |
|---|
The same $2,000, paid two ways
Say a single person is paid $2,000 every two weeks for a full year. The work and the money are the same. Only the label is different. Here is what happens.
As an employee
| Line | Amount |
|---|
| Gross pay | $2,000.00 |
|---|
| Federal income tax (estimate) | $156.15 |
|---|
| Social Security | $124.00 |
|---|
| Medicare | $29.00 |
|---|
| Take home pay | $1,690.85 |
|---|
The employer keeps $309.15 for taxes and pays another $153 as its own share of Social Security and Medicare. You never touch that money.
As a contractor
| Line | Amount |
|---|
| Payment received | $2,000.00 |
|---|
| Tax withheld | $0.00 |
|---|
| Amount to set aside for self employment tax (estimate) | $282.59 |
|---|
| Amount to set aside for income tax (estimate) | $139.20 |
|---|
| What you really keep | $1,578.21 |
|---|
You get the whole $2,000 in your account. But about $422, or 21 percent, belongs to the government. That is more than the employee's $309, because you also cover the employer's half of Social Security and Medicare.
These are simple estimates for a single filer using 2026 federal figures and the standard deduction. They leave out state tax and business expenses. Deductions such as half of your self employment tax and the qualified business income deduction can lower a contractor's bill, so ask a tax professional about your case.
Need a stub for either type?
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Are you an employee or a contractor?
This matters more than the stub. Calling someone a contractor does not make it true. The IRS looks at three areas:
- Behavior. Does the business tell you how, when and where to do the work?
- Money. Does the business pay your expenses and supply your tools? Can you make a profit or a loss?
- The relationship. Is there a contract, are there benefits, and is the work ongoing and central to the business?
Some states use stricter tests than the IRS. If a business treats you like an employee but pays you as a contractor, that is called misclassification. It can lead to back taxes and penalties for the business. If you are not sure, you can ask the IRS to decide by filing a worker status form, or ask a tax professional.
If you own a business and pay people, this is a big deal. Read a guide for your first hire, then compare how a stub tool differs from a payroll system to see what you need.
Which stub do you need?
You get a 1099
- You are a contractor or freelancer.
- You need a contractor stub with no withholding.
- Keep every 1099 and invoice too.
You pay workers
- Employees get stubs with taxes withheld.
- Contractors get an earnings statement.
- You may need both types.
You do both
- You have a job and a side gig.
- Make a stub for each income source.
- Keep them in separate files.
The 1099 reporting limit changed in 2026
For payments made in 2026, a business must send a 1099 NEC when it pays a contractor $2,000 or more in the year. The old limit was $600. Here is the catch. All income is taxable from the first dollar, whether or not you get a form. Track your own earnings, and keep your own records.
Using a contractor stub as proof of income
Landlords and lenders know that contractors do not get regular stubs. So they ask for more. Expect a request for some or all of these:
- Your most recent stubs or earnings statements
- 1099 forms for the last one or two years
- Bank statements showing deposits
- Recent tax returns
Build your file before you need it. See eight papers that show what you earn, what a lender expects to see, and how many stubs a rental application asks for.
Real numbers only. A stub built from true figures is a normal record of earnings. A stub built from made up income to win a lease or a loan is fraud, no matter which tool made it. Lenders and landlords often check stubs against bank deposits and tax records.
How to make a contractor stub
- Tick the Contractor box. Open the tool and mark the Contractor option before you start. Pick your state and how often you are paid.
- Enter your details. Add your name, the client's name, the amount and the pay period. Use your real invoice or deposit figures.
- Preview it for free. Check each line. Compare the amount with your bank deposit.
- Pay $6.99 and download. Use a debit card, credit card or PayPal on an encrypted page. The PDF arrives by email within minutes. There is no account and no subscription.
What it costs
- Preview: free
- One pay stub: $6.99, with any of seven templates
- Your first classic stub: free for new users
- Extras such as a deposit slip: $2 each
- Typos found later: email us within 24 hours and we fix them
Want tips on choosing a tool? Read how to choose a good online tool. Working with a template instead? Look at sample layouts to look at.
Mistakes to avoid
- Adding tax lines to a contractor stub. If no one withheld tax, the stub should not show any.
- Skipping the tax set aside. Put roughly a fifth of each payment in a separate account, and adjust with a tax professional.
- Treating a stub as a tax form. A stub does not replace a 1099 or your return.
- Mixing up gross and net. If that is confusing, read why take home pay is smaller.
- Guessing at deductions. See where each deduction comes from, and how running totals are built.
Questions people ask
What is the difference between a contractor pay stub and an employee pay stub?
An employee pay stub shows gross pay and the taxes the employer withheld, such as federal income tax, Social Security and Medicare. A contractor pay stub shows only earnings, because no one withholds tax from contractor pay. Contractors pay their own taxes when they file.
Do independent contractors get pay stubs?
Usually not. No federal law requires a pay stub for contractors. They are paid against invoices, and the client sends a 1099 NEC form after the year ends if payments reach the reporting limit. Many contractors make their own stubs to keep a clean record of income.
Is a 1099 the same as a pay stub?
No. A pay stub covers one pay period. A 1099 NEC is a yearly tax form that reports the total a client paid a contractor. A landlord or lender may want both.
What taxes do contractors pay?
Contractors pay federal income tax and self employment tax, which is 15.3 percent on most net earnings. That covers both the employee and employer share of Social Security and Medicare. They also pay state income tax where it applies, and many pay estimated tax each quarter.
What is the 1099 NEC reporting limit in 2026?
For payments made in 2026, a business must send a 1099 NEC when it pays a contractor $2,000 or more in the year. The old limit was $600. All income is taxable even when no form is sent.
How do I know if I am an employee or a contractor?
The IRS looks at how much control the business has over your work, how money matters are handled, and the nature of the relationship. A job title or a signed agreement is not enough on its own. Some states use stricter tests, so ask a tax professional if you are unsure.
Will a landlord or lender accept a contractor pay stub?
Many will, when the figures are real and match your bank deposits. Lenders usually also ask for 1099 forms and recent tax returns from self employed applicants, so have those ready.
How do I make a contractor pay stub online?
Open the pay stub tool, tick the Contractor box, and enter your real pay details. Preview the stub free, then pay $6.99 to download it. Compare the amount with your bank deposit before you buy.
The bottom line
An employee stub shows the taxes your boss took out. A contractor stub shows what you earned, and the tax bill is yours to plan for. Know which group you are in, keep good records, and use real numbers on every document.
When you need a stub for either one, you can build it, check every line and pay only when it matches your records.
Social Security wage base figures come from the Social Security Administration. This article is general information, not tax, legal or financial advice. Worker status and tax rules differ by state and change over time, so check with a tax professional for your case.
