Gig Economy Workers
What is the Gig Economy?
The IRS defines the gig economy as an “activity where people earn income providing on-demand work, services or goods. Often, it’s through a digital platform like an app or website.”
What some may not realize is that money earned through the gig economy is usually taxable, even if it’s a part-time, temporary, or side gig. This includes freelance work, selling goods online, ride-sharing and food delivery services, renting out a home or spare bedroom, and more. This kind of work may not be reported on an information return like Form 1099-K, 1099-NEC, 1099-MISC, or W-2, but it must still be reported as income.
Managing Taxes for Gig Workers
If you’ve determined that you’re a gig worker, it’s important that you follow the necessary steps to ensure that you meet the requirements for tax reporting and withholding, filing a depositing.
As a gig worker, you need to:
Keep Records: Save receipts of your expenses and keep records of money you receive from gig work and sales.
Pay estimated taxes: You may be required to pay estimated taxes and file a 1040-ES, Estimated Tax for Individuals on a quarterly basis.
File a Tax Return: In addition to filing a Form 1040, U.S. Individual Income Tax Return, you may need to file a Schedule SE (Form 1040), Self-Employment Tax and a Schedule C (Form 1040), Profit or Loss from Business (Sole Proprietorship)
For more information, visit the IRS page: Gig Economy Tax Center.
Filing Taxes as a Gig Worker
More and more individuals are joining the gig economy due to advancements in technology and COVID-19. If you need help understanding your responsibilities as a gig worker, we highly recommend that you consult a professional. This will ensure that you are staying compliant and taking care of your taxes in a timely and accurate manner.
If you’re ready to file your taxes, our tax preparers can help! Give us a call at (360) 922-0235 to schedule an appointment.
Disclaimer: This material is prepared for informational purposes only, and is not tax advice. Please speak with a tax professional or view the resources below to see how this information may apply to you.
