Got a Gig? Gig economy income is taxable! Whether you are renting out a spare bedroom or providing car rides, or freelancing in professional services, Fuoco Group wants taxpayers to understand the IRS rules regarding income so they can stay compliant with their taxes and avoid surprises for 2019 tax year filings.
The gig economy is a sharing, on-demand, or access economy. It usually includes businesses that operate an “app,” website or other digital platform to connect people in order to provide on-demand work, services or goods to customers. There are many types of gig economy businesses such as:
• Drive a car for booked rides or deliveries
• Rent out property or part of it
• Run errands or complete tasks
• Sell goods, beauty products, clothing, handmade craft items online
• Rent equipment
• Provide creative or professional services
• Provide other temporary, on-demand or freelance work
You must pay tax on income you earn from gig work. You must file a tax return if you have net earnings from self-employment of $400 or more from gig work. If you do gig work as an employee, your employer should withhold tax from your paycheck. If you do gig work as an independent contractor, you may have to pay estimated taxes. Educating gig economy workers about their tax obligations is vital because many don’t receive form W-2s, 1099s or other information returns for their work in the gig economy. However, income from these sources is generally taxable, regardless of whether workers receive information returns like a Form 1099-K, 1099-MISC, W-2 or other income statement. It doesn’t matter if the work is fulltime, part-time, temporary, or side-work. It doesn’t matter if the person is paid in cash, property, goods, or virtual currency.
A gig worker needs to keep good records. Workers may also be required to make quarterly estimated income tax payments, pay their share of Federal Insurance Contribution (FICA), Medicare and Additional Medicare taxes if they are employees, and pay self-employment taxes if they are not considered to be employees but are Independent Contractors.
Taxpayers need information about the tax implications for both the companies that provide the services and the individuals who perform them. Get educated on topics like:
• making quarterly estimated income tax payments
• paying self-employment taxes
• paying FICA, Medicare and additional Medicare
• deductible business expenses
• special rules for reporting vacation home rentals
Understand your tax obligation if you operate a digital platform, marketplace or business in the gig economy. You must correctly classify workers and meet requirements for information reporting and tax withholding, filing, and depositing. You may also want to consider helping your workers meet their tax obligations.
Contact Us: Fuoco Group is ready to help taxpaying workers and businesses in this growing gig economy to meet their tax obligations. Out tax experts are available in New York and the tri-state area as well as in Florida. Call toll free at 855-534-2727.
