During the pandemic, a lot of us lost our regular jobs and many of us took part-time jobs or we entered the gig economy. The IRS is well aware of the change and now the IRS has a section on its website with all sorts of information about the gig economy — and you guessed it — the information is there to make sure that the IRS collects taxes on the gig economy.
The IRS says you must file a tax return if you have net earnings from self-employment of $400 or more from gig work. Gig work includes a side job, part-time work, or temporary work.
If your gig work means you are an employee then your employer should withhold tax from your paycheck. There’s been a lot of controversy about whether or not drivers for ride-sharing services are employees or not. If you are working as a gig worker for a business ask about your status. Will the employer withhold taxes or are you obligated to file your own estimated taxes each quarter?
There are all sorts of jobs that are considered gig jobs and with those jobs come taxes.
Gig workers who drive passengers or make deliveries have to pay taxes.
If you rent out property or part of your property — you rent out your house or a room — you’re part of the gig economy. Be ready to pay taxes.
You sell goods online or you rent out equipment — you’re in the gig economy.
You do freelance work writing ads or painting signs — you’re in the gig economy.
Since you’re in the gig economy you should be keeping track not only of your income but also keep track of your expenses. Those expenses can help lower your tax bill.
Remember that quarterly tax payments are expected.
And if you worked for a business you could receive a 1099 or a W-2 by the end of January.
The bottom line here is to keep track of your expenses. I’ll say it again — keep track of your expenses. It’s tough these days and you don’t want to pay more taxes than you have to.
Remember, Legal Tax Defense has a tax attorney that offers a free consultation if you have tax problems. Call now for your free consultation.
Disclaimer: Alan Mendelson is a well-known TV consumer news reporter who reports on tax issues. You should seek professional advice if you have tax questions or issues.
