If the freelancer is in the US, you must send him/her the IRS form (I forget the form number) for him/her to report to you the person's status as a business: sole proprietorship, LLC, C Corp, etc.
If the freelancer is a sole proprietorship, and you paid that freelancer more than $600 in a calender year, then you must send the freelancer a form 1099 by January 31st of the following calendar year. The 1099 would list all payments to the freelancer. It's up to him/her to break out expenses versus net income.
I don't know what state you live in, but here in Wisconsin, the Department of Workforce Development takes a close look at "independent contractors." I've had three audits from the DWD in the last 15 years.
WI has some very strict guidelines on what constitutes an "indepedent contractor."
1. If the person has another job from which payroll taxes are withheld, then that person is not an independent contractor, and any company paying the person for any services must withhold unemployment taxes. (Which opens up a whole can of worms when it comes to IRS investigations).
2. The person must make himself/herself available to other companies for the same services.
3. The person must have worked for other companies within the past year. If you're the only one who used that person's services, then you're that person's employer.
4. The person must advertise his/her services via direct mail, directory advertising, leaflets, or other means.
5. Does the independent contractor have his/her own workmen's compensation insurance? If not, the DWD may decide that the person is not independent.
Again, Wisconsin is really tough about the definition of "independent contractor."
But if you just assume your freelancer is an independent contractor, you could wind up on the hook for a few hundred dollars. Or maybe more.