Which statement about independent contractors and employees is true?

The correct statement highlights that independent contractors are able to deduct certain expenses from their income. This is an important aspect of how independent contractors operate because they typically operate their own businesses and bear various costs associated with that work.

Independent contractors, unlike employees, are responsible for managing their own business expenses. This allows them to deduct specific costs from their taxable income, which can include expenses for supplies, travel, or home office costs, among others. These deductions help reduce their overall tax burden, acknowledging the business-related expenses that are necessary for their work.

Understanding this distinction between independent contractors and employees is crucial, as it underscores the different tax responsibilities and financial implications associated with each status. Employees typically have a more limited scope for deducting expenses due to the nature of their employment and the way their work-related costs are often covered by their employers.

The other statements either misrepresent the nature of independent contractors or the tax classifications that apply to them. Such distinctions are key to understanding real estate practices and the classifications of various working relationships in the field.