Tax Guide for Gig Workers

Tax Guide for Gig Workers


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Tax Guide for Gig Workers

, 1st Edition

The Tax Guide for Gig Workers explains everything gig workers need to know about taxes.  Whether you drive for Uber or Lyft, code for Upwork clients, or perform paid chores through TaskRabbit, this book gives you the practical information you need to minimize your taxes while avoiding problems with the IRS.

This book provides an overview of everything you need to know about being a gig worker, including:

  • how a gig worker is classified for tax purposes
  • what records to keep
  • what deductions to take on your tax returns
  • and more.

See below for product details.

Product Details

At least 10% of the American workforce are now gig workers who obtain jobs through online hiring platforms like Uber, Lyft, Upwork, TaskRabbit and many others.  Gig workers are typically treated as self-employed, which means their taxes are far more complicated than those of traditional employees.  Many gig workers lose valuable deductions or otherwise overpay their taxes or get in trouble with the IRS because they don't understand the tax rules that apply to them.

Tax Guide for Gig Workers explains:

  • how a gig worker is classified for tax purposes
  • how to pay self-employment and estimated taxes
  • what deductions to take
  • how to lower their taxes by taking advantage of the new 20% pass-through deduction
  • what records to keep,
  • and more.

Whether you drive for Uber or Lyft, code for Upwork clients, or perform paid chores thorugh TaskRabbit, this book gives you the practical information you need to minimize your taxes while avoiding problems with the IRS.



Number of Pages

About the Author

Table of Contents

1. Introduction to the Gig Economy

2. Your Worker Status: Independent Contractor or Employee?

  • Independence and Control
  • Income Taxes
  • Social Security and Medicare Taxes
  • Job Benefits
  • Labor Law Protections
  • Are Gig Workers Ever Employees?

3. Taxes You Must Pay

  • Federal Taxes
  • State Taxes
  • Local Taxes

4. How to Pay Self-Employment Taxes

  • When You Must Pay SE Taxes
  • Two Separate Self-Employment Taxes
  • Earnings Subject to SE Taxes
  • Paying and Reporting SE Taxes
  • SE Tax If You Also Have an Employee Job

5. Tax Deductions for Gig Workers

  • What You Can Deduct
  • Gig Business Mileage
  • Home Office Deduction
  • Deducting Long-Term Assets

6. Cut Your Taxes 20% With the New Pass-Through Deduction

  • You Must Have a Pass-Through Business
  • What is Qualified Business Income?
  • 20% Deduction for Taxable Income Below $157,500 for Singles ($315,000 for Marrieds)
  • Deduction for Income Above $157,500 ($315,000 for Marrieds)
  • Taking the Pass-Through Deduction

7. Paying Estimated Taxes

  • Who Has to Pay Estimated Taxes?
  • Estimated Taxes Are Paid Quarterly
  • How Much Do You Have to Pay?
  • How to Pay Estimated Tax
  • What If You’ve Paid Too Little?
  • What If You Paid Too Much?

8. Filing Your Tax Return

  • IRS Schedule C
  • Other Tax Forms
  • Who Prepares Your Return?
  • Hiring a Tax Pro
  • Preparing Your Return Yourself

9. What Does the IRS Know About You?

  • IRS Information Returns for ICs (Including Gig Workers)
  • Form 1099-K: Understand the Rules
  • Form 1099-MISC: For Direct Payments Only

10. Record Keeping: Preserve Your Deductions

  • Business Checking Account and Credit Card
  • Income and Expense Records

Sample Chapter

Chapter 1
Introduction to the Gig Economy

The gig economy enables self-employed people to sell their services to the public through online hiring platforms. Prospective clients or customers use these platforms—either online or through a smartphone app—to search for service providers or specify the jobs they need done. The people seeking work (whom we’ll call gig workers) contract with the hiring platform to get access to clients or customers through their platform.

Payment for the gig worker’s services is done through the platform, which charges the gig worker a fee or percentage for each job the gig worker obtains through the platform. Gig workers usually work for their clients or customers on a short-term or one-time basis—for example, a gig worker might be hired to help design an app or pick up a client’s laundry or clean a house. In some situations, the gig worker and client may enter into a separate agreement through the platform setting forth the terms of the work or project.

Gig workers provide many different types of services—Uber and Lyft driving being the most well known. Other types of projects and work that gig workers perform include:

  • household services, such as household moving and cleaning (for example, through TaskRabbit and Handy)
  • a variety of business services, such as accounting, marketing, and design services (for example, through Freelancer and Upwork)
  • design work (for example, through 99designs and
  • coding and other types of hi-tech services (for example, through GetACoder)
  • food and grocery delivery services (for example, through Instacart and Postmates), and
  • health and medical care (for example, through Heal and Pager).

No one knows exactly how many people work in the gig economy. Estimates range from 600,000 to 2.5 million workers, with around 400,000 people driving for Uber alone. But the number is growing rapidly, and is expected to double by the year 2020. Some people obtain all or most of their work through one or more online hiring platforms. Most people, however, use such platforms when they are first starting out or to supplement work they obtain through more traditional means. The gig economy is referred to by various names including the on-demand economy, the sharing economy, the peer-to-peer economy, and the matching economy.

The vast majority of gig workers are self-employed independent contractors for tax purposes, not employees of the hiring platforms they work with or their clients or customers. In effect, when you become a gig worker—whether full or part time, you are running your own one-owner small business (also called a sole proprietorship).

Employees don’t need to worry much about taxes. All or most of their taxes are withheld from their paychecks by their employers and paid directly to the IRS and state tax department. The employer calculates how much to withhold and employees don’t take deductions for business expenses. The employee’s only responsibility is to file a tax return with the IRS and state tax department each year.

When you become a gig worker, your tax life changes dramatically. Because you’re running your own business, you may deduct virtually all the expenses you incur to earn your gig income. As an independent contractor, your employer doesn’t pay any of the taxes due on your gig income. Instead, you are responsible for paying all your taxes directly to the IRS and your state. This requires periodic tax filings you probably never made before. You will also have to calculate how much you owe. You’ll need to keep accurate records of your gig business income and expenses. And the tax return you file each year will likely be more complicated than the ones you filed before you became a gig worker.

Unfortunately, most hiring platforms provide little or no information about, or help with, the taxes gig workers must pay. Many gig workers are woefully ignorant about taxes. One recent survey of gig workers found that:

  • one-third did not know they are required to file quarterly estimated payments with the IRS
  • more than one-third did not understand what kind of records they need to keep for tax purposes
  • over 40% did not know how much tax they would owe on their gig income or set aside any money to pay such taxes, and
  • almost half did not know about the deductions they could claim to reduce the tax they had to pay on their gig income.

Such ignorance can be very costly—for example, every dollar in deductions you fail to claim could cost you over 40 cents in extra taxes, while failure to timely pay estimated tax can result in costly penalties.

This guide is intended to fill this tax knowledge gap.