Resources to Help Gig Workers Understand Taxes [feedly]

Resources to Help Gig Workers Understand Taxes
https://www.cbpp.org/blog/resources-to-help-gig-workers-understand-taxes

The gig economy has grown to about a quarter of all workers, but their participation in it varies widely: while 1 in 10 workers relies on gig work for their primary income, most gig workers are active just a few months in a year. Such employment can have complicated tax implications, which is why CBPP's Get It Back campaign offers an online tax tool to help these workers understand how they can file a correct tax return and reduce their tax liability.

Aimed at transportation workers, who dominate what's known as the online platform economy, this tool — the Roadmap to Rideshare Taxes — is a helpful guide with step-by-step information on how to pay taxes when the IRS treats you like a business. The site covers tricky self-employment tax topics, including:

• Understanding how self-employment taxes work;
• Counting income;
• Tracking tax deductions for business expenses;
• Tracking mileage; and
• Making quarterly estimated tax payments.

There's also a one-page cheat sheet that guides rideshare workers through carefully tracking their deductions, paying taxes quarterly, and filing their tax returns annually. Tax deductions for driving expenses (like the mileage deduction) are the best way to reduce the amount of income subject to both income and self-employment taxes.

In addition, self-employed workers need to pay taxes throughout the year because, unlike with an employer, platform companies don't withhold a portion of workers' taxes from their paychecks. Anyone expecting to owe more than $1,000 in taxes (which is anyone with roughly $5,000 in self-employment income) must pay estimated taxes quarterly. The amount owed can be hard to calculate without outside assistance, and our tool helps with that, too.

Gig work offers important benefits for many, including flexible hours, a low barrier to entry, and immediate work. But filing taxes from such work can be stressful and complex. The Roadmap to Rideshare Taxes is designed to help.

Have questions or suggestions? Email eitcoutreach@cbpp.org.

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