Can I legally pay subcontractors hourly in IN and use 1099's? Another words if they are paid hourly are they legally defined as employees as opposed to sub-contractors?

Hi there, @Izzybelle.

Thanks for reaching out to us here in the Community. Allow me to share some insights about paying subcontractors hourly in IN and use 1099's in QuickBooks Self-Employed.

An employee receives a net salary after the employer has withheld income tax, Social Security and Medicare tax under the Federal Insurance Contributions Act (FICA). While, contractors are not subject to tax or FICA withholding, but pays his or her own self-employment tax. They are not eligible for worker's compensation benefits, unemployment compensation benefits. This is regardless if you pay the subcontractor hourly, it's within your agreement.

Ideally in QuickBooks Self-Employed, if you have paid a contractor regardless if its hourly or salary based, you'll have to categorize the payment as Schedule C: Contract labor.

However, to make sure that your books are accurate and for legal matters, I'd suggest reaching out to your accountant for additional assistance. Or you can check on our TurboTax AnswerXchange page to get more information. 

Also, you can check out this article about filing taxes when you have both 1099 and W-2 income in QuickBooks Self-Employed for your future reference:

• How to file taxes when you have both 1099 and W-2 income in QuickBooks Self-Employed.
• QuickBooks Self-Employed Overview.
• Schedule C: Contract labor. 

This amount of information should get you on the right track, @Izzybelle. 

Feel free to reach back out to me if I can be of additional assistance. I'm always here to help. Have a great weekend!