An Introduction To Tax Forms For Gig Economy Workers

The gig economy has transformed the contours of the modern workforce, bringing forth a unique combination of flexibility, autonomy, and diversified income streams. Whether you’re driving for a ride-sharing platform, developing eye-catching graphics as a freelance designer, or mastering home repairs as a handyman, you’re participating in an ever-evolving, vibrant economy. But with the freedom of gig work comes an often overlooked aspect: understanding and managing your tax obligations. In this blog, I’ll cover some of the essential tax issues and IRS forms with which every gig worker should be familiar.

As a participant in the gig economy, you’re an independent contractor in the eyes of the IRS. Essentially, you’re a solo entrepreneur, which ushers in a unique set of tax rules and obligations. Central to these obligations is the Form 1099 series (Form 1099-NEC, Form 1099-K, Form 1099-MISC). We’ll look at each of these to get a better understanding of your gig worker responsibilities, but the key is that you must report your income to the IRS and to state and local tax agencies. As a gig economy worker, you should be familiar with what constitutes “income” and what you need to include on your annual tax return regardless of whether you receive one of the forms.

Income

Income is the starting point for determining taxes due. In general, income is all the money and other things of value that you receive, but the technical definition is broad. For practical purposes, income can include payments you receive from wages and employee benefitsself-employment or side jobs (freelance or independent contractor work), goods or services you sell online, renting personal property, partnerships or other business entities, investments, or other benefits paid to you. Income isn’t just money – it can also be the value of goods or services you receive. (Think of a bartering transaction where someone pays you in an exchange by giving you an item or providing valuable work for you.) You can even have income for tax purposes for payments made to someone else on your behalf. Income is generally taxable when the payment is available to you, even if you don’t immediately take possession of it; for example, you usually can’t delay income simply by waiting to pick up a check or deposit it into your account.

When you perform gig work, you should carefully store and organize your receipts and other records of your costs. Tax law allows you to deduct certain business expenses, which can reduce the amount of tax you will ultimately need to pay on your income. While tax law requires third parties in certain situations to report payments to taxpayers, such as through the Form 1099 series, those forms generally only show your income, not your expenses. It’s your responsibility to keep track of your deductible costs so that you can correctly calculate the tax you owe. Even if you don’t receive a form reporting income paid to you during the tax year, you should report the income on your tax return.

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Do Not Include Social Security Numbers Or Personal Data

WASHINGTON — The Internal Revenue Service reminded certain tax-exempt organizations that the Tuesday, May 15 filing deadline for Form 990-series information returns is fast approaching.

Form 990-series information returns and notices are normally due on the 15th day of the fifth month after an organization’s tax-year ends. Many organizations use the calendar year as their tax year, making May 15, 2018 the deadline to file for 2017.

No Social Security Numbers On Forms 990 Read More

A frequent question we get throughout the year is: How long should I keep records and tax returns?

Here is a helpful guide to follow:

1 Year
Monthly statements of investments until an annual statement recapping the year’s activity is available, bank statements, copies of checks used for tax deductible expenses and payroll statements until your W-2 arrives and you confirm the information matches.  Read More

If you own a small business, you need to keep business records. These can include digital or hard copies. They may contain financial information and licenses. Business record retention is necessary for your annual tax filings. It’s also necessary for potential audits.

What Are Business Records?

You know saving business documents is important. Now, you need to figure out what documents to save. The term “business documents” can refer to many things, including: Read More

Form W-2

You should receive a Form W-2, Wage and Tax Statement, from each of your employers for use in preparing your federal tax return. Employers must furnish this record of 2017 earnings and withheld taxes no later than January 31, 2018 (allow several days for delivery if mailed).

If you do not receive your Form W-2, contact your employer to find out if and when the W-2 was mailed. If it was mailed, it may have been returned to your employer because of an incorrect address. After contacting your employer, allow a reasonable amount of time for your employer to resend or to issue the W-2. Read More

Whether you’re filing taxes yourself or having a tax preparer do them for you, it’s important to have all the necessary documents. Gathering them beforehand can save both time and frustration.

You should receive the majority of these documents by January 31, which is the new deadline for companies and employers to send out W-2 and 1099 forms. Each federal tax form is explained below so you can make sure you have everything you need to file your taxes. Read More

John Dundon

As many of us who hang our own shingle are painfully aware, IRS Form 1099-misc is due NEXT WEEK. YIKES! I’m still shaking off the holidays.

The failure to timely file this ‘informational return’ has gone up this year. So you really do NOT want to miss this deadline, particularly if you are a contractor that needs to get 50 or so of these out.

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Annette Nellen

Several states require employers to notify employees that they may be eligible for the federal (and perhaps also state) Earned Income Tax Credit (EITC). This year, California law was changed to require employers to also notify employees about the California EITC recently added to the law.

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John Dundon

The most common year end tax planning questions generally have been revolving around the implications of sheltering and feeding fully grown and educated children as flying the coop has become increasingly difficult for the current generation of young adults. “Hanging” at Mom and/or Dad’s place as a young professional is the new ‘thing” to do. If you can…

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Ron Marini

On July 31, 2015, President Obama signed into law P.L. 114-41, the “Surface Transportation and Veterans Health Care Choice Improvement Act of 2015,” which includes a number of important tax provisions, including revised due dates for partnership, S corporations and C corporation returns and revised extended due dates for some returns.

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Annette Nellen

There are a lot of tax and related forms! Here is an update about one required by all employers when they hire an employee. Form I-9, Employment Eligibility Verification, has been updated (as of 11/14/16) and the new version must be used by January 22, 2017 (see news release from USCIS). “Among the changes in the new version, Section 1 asks for “other last names used” rather than “other names used,” and streamlines certification for certain foreign nationals.”

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MileIQ

We often talk about tracking your mileage and expenses for tax purposes. But, what are you supposed to do with it? Let’s go over the basics on reporting business mileage on your tax return.

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