Independent contractors are businesses

The first thing to know about being an independent contractor (consultants, freelancers, consultants, gig workers, sole proprietors and other self-employed people) is that, under both federal and New Mexico tax law you are considered to be in business. That means that in addition to federal and state income taxes, you owe New Mexico gross receipts tax on your sales and the IRS self-employment tax on the profit from your business.

All businesses doing business in New Mexico are required to register with the N.M. Taxation & Revenue Department and report their gross receipts (aka sales) in order to determine the amount of gross receipts tax or which they are liable.

Once the registration process is complete the business will receive their Business Tax Identification Number (BTIN). This number is required to report gross receipts and NM income tax withheld from employees' wages.

Note: Out-of-state businesses are also required to file income tax returns to report the share of their profit from doing business in New Mexico.