Nonemployee compensation refers to payments made to individuals who are not classified as employees of a company. This can include payments to freelancers, independent contractors, and other self-employed individuals for services rendered. Such compensation is typically reported on tax forms like the Form 1099-NEC in the United States. This type of compensation is important for tax purposes, as it is subject to different reporting requirements than regular employee wages. Nonemployee compensation does not have taxes withheld by the payer, meaning the recipient is responsible for reporting this income and paying any applicable taxes when filing their tax returns.