I'm an animation major at my college and I have been thinking about making a game lately. These are just some general questions I have about hiring a programmer.

If I were to hire a programmer would I need them to sign a contract if we were in different states/countries? And if I would what would the contract even need to say. There was a person I knew who worked with freelancers in a different field of work. However he didn't get them to sign a contract, and in the end, most ended up walking off the job.  So basically, how do you cover yourself when working with a limited budget on an indie project.

Who is/are "I"?   Is it you in your capacity at the school? Is it you on your own for your own side project?

If it is through the school, the HR folk could help you out, there will also be the school's lawyers you might need to talk to about the content of the contract.  They should be doing the contract and employment work after you describe exactly what you need.

If it is on your own, there are all kinds of concerns.  The details of how you are hiring are very important.  Are you required to pay taxes on the payments, withhold taxes, on their behalf, and report them? Are you required to have worker's comp insurance?  If it is contract work, what exactly is being delivered, and how are IP rights handled?  What are your clauses for termination or completion of the agreement? As you mention the people may be remote, you'll have concerns about venue and choice of law, and you'll need to ensure you follow the laws both of where you are located and of where they are located.

There is far more involved when hiring people, and the best route is to have a lawyer who understands employment law and IP law walk you through it.

Contracts are a big deal, especially in game making, because if not, they technically can steal your stuff.

So definitely write up a contract when you decide to hire someone, because then if something goes wrong, you know at least that they can't take what they've made for YOUR game.

The word 'indie' (independently funded) isn't relevant -- either you're a business and have to be aware of employment law and tax obligations in your local jurisdiction (and how to conduct business with companies in other jurisdictions), or you're not a business. There is no middle ground ;(

Well, there's kind of a middle ground. 

The main two options are:

1) you're running a business. Take time to learn what your responsibilities are. Get an accountant and a lawyer.  Learn the legal difference (if there is one) between an employee and a contractor in your jurisdiction, and make sure that your contractors fit into that definition.

2) you've got a hobby. Wing it. Open source your stuff. You won't make money, but you weren't going to make money anyway and at least you're not spending much, so you actually come out ahead! 

And the middle ground:

3) legally you're a business but you're not fulfilling your obligations to the tax office or your staff. Hope you don't get audited. Wing it. Use sites like freelancer or upwork to get people to do work while your money is held in escrow. Use off the shelf contracts from docontract.com

To get back to the question though... The point of a contract is to explicitly lay out the expectations of both parties to help in resolving any disputes. If either you or the person you're paying breaks that contract (e.g. you pay them and don't receive any work in return), you have to go to a court and ask them to do something about it. If you're both in the same town, this isn't that hard -- there's probably some kind of small claims tribunal that you can go to without even getting a lawyer. If you're on opposite sides of the planet, then it's a lot harder -- are you really going to fly to their country to ask one of their courts to mediate your dispute?

So in the end it's an exercise in risk management... if it's a small amount of work/money and an international dispute arises, it's probably not worth trying to resolve through a third party anyway. The contract is still useful though, as the two of you can both point to it to see exactly what it is that you both agreed to.

Another thing to go off is reputation. Maybe working with people on the other side of the world is too risky because they know you're not going to come after them... but if you're hiring a known professional with a very strong reputation on the other side of the world, there's a very good chance that they will live up to that reputation and everything will go fine. Likewise, if you hire someone with no reputation, then you're gambling.