More and more people are gravitating towards the gig economy and away from the 9 to 5 daily grind. Some companies are also making the switch and choosing to hire independent contractors rather than full time employees. While the gig economy has its perks, it also means a change in how taxes will need to be filed for those participating. A few extra steps have to be taken when it comes to your taxes, getting your paperwork in order is the most important. According to a survey conducted by Xero, 73% of on-demand workers don’t deduct any expenses at all, with about half not even knowing that expenses can be deducted. Don’t let that be you! To help you prepare and file correctly, we’ve put together a few tax tips:
If you were paid, it’s taxable income.
Even if gig work is a little extra change in your pocket, the IRS sees it as a business transaction. You still have to report it as income earned. For our Gigwalkers it’s simple! Login to your paypal account and you’ll be able to see how much you earned last year.
Reporting your income.
This depends on how much you earned doing side jobs. Were you an independent contractor or freelancer making over $20,000 and conducted over 200 transactions? You’ll report your earnings with a 1099 form, which comes from your payer. If you did a few gigs for Gigwalk and earned less than $5,000, you’ll still have to report this income but you’ll only use the Schedule C form. If you aren’t sure which bucket you are in, you can get more information on the IRS website.
Deduct those expenses!
Believe it or not there’s a way to lower your tax bill! Make sure to deduct any expenses incurred from your gig work. For example, if you drive for Uber or Lyft, you can deduct for maintenance and repair work (as long as it isn’t an improvement), gas used and even snacks you provide your riders. To see what you may be able to deduct, take a look at the IRS website.
No double reporting, even if you have multiple side jobs.
Be extra careful not to double report any of your expenses! If you work out of your home but also rent it out from time-to-time, you can’t report it as both a home office and rental property.
For our Gigwalkers filing taxes, we wish you a smooth tax season and easy reporting!
For employers hiring independent contractors or using gig workers for small tasks on the side, Gigwalk makes it easy to ensure compliance by tracking hours, wages and overtime of your workers. Use Gigwalk to launch your projects and schedule your workers and make your life easier this tax season!
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