Useful Links:
IRS.gov
Help For Hurricane Victims
News Essentials
What's Hot
News Releases
IRS - The Basics
IRS Guidance
Media Contacts
Facts & Figures
Around The Nation
e-News Subscriptions
The Newsroom Topics
Multimedia Center
Noticias en Español
Radio PSAs
Tax Scams/Consumer Alerts
The Tax Gap
Fact Sheets
IRS Tax Tips
Armed Forces
Latest News
IRS Resources
Compliance & Enforcement News
Contact Your Local IRS Office
Filing Your Taxes
Forms & Instructions
Frequently Asked Questions
Taxpayer Advocate Service
Where to File
IRS Social Media
|
Issue Number: 2021-63
Tips for taxpayers who work in the gig economy
The gig economy allows people to earn income by using technology to arrange transactions. This could include performing rideshare services or deliveries, renting out property, selling goods online, or providing freelance work. Often, customers and providers of goods or services are brought together through a digital platform on an app or website.
It’s important for all gig economy workers to understand their tax obligations.
Here are some things taxpayers should remember They must report all income, even if the income is:
- From part-time, temporary, or side work
- Not reported on a Form 1099-K, 1099-NEC, 1099-MISC, W-2, or other information return.
- Paid in the form of cash, property, goods, or virtual currency
Taxpayers may also be required to make quarterly estimated income tax payments and pay self-employment tax.
While providing gig economy services, it is important that the taxpayer is correctly classified.
- It is critical that business owners correctly determine whether the individuals providing services are employees or independent contractors.
- Taxpayers can use the worker classification page on IRS.gov to determine how they are being classified.
-
Independent contractors may be able to deduct business expenses, depending on tax limits and rules. It is important for taxpayers to keep records of their business expenses.
It's important for taxpayers to pay the right amount of taxes throughout the year to avoid owing when they file.
- An employer typically withholds income taxes from their employees' pay to help cover income taxes their employees owe.
-
Gig economy workers, who are not considered employees, have two ways to cover their income taxes:
- If they have another job as an employee, gig workers can submit a new From W-4 to their employer to have more income taxes withheld from their paycheck.
-
Make quarterly estimated tax payments to help pay their income taxes throughout the year, including self-employment tax.
The Gig Economy Tax Center on IRS.gov answers questions and helps gig economy taxpayers understand their tax responsibilities.
More information: Publication 5369, Gig economy and your taxes: things to know Publication 1779, Independent Contractor or Employee Is My Residential Rental Income Taxable and/or Are My Expenses Deductible?
Share this tip on social media -- #IRSTaxTip: Tips for taxpayers who work in the gig economy. https://go.usa.gov/xHpXU
Back to Top
Thank you for subscribing to IRS Tax Tips, an IRS e-mail service. For more information on federal taxes please visit IRS.gov.
This message was distributed automatically from the IRS Tax Tips mailing list. Please Do Not Reply To This Message.
|