IRS Reminds Taxpayers Gig Work Must Be Reported, Provides Record-Keeping Guidance

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Many people are surprised to learn that gig workers are small business owners in the eyes of the IRS, regardless of whether your gig job is your primary source of income or a side hustle. This means extra tax rules and filing as an independent contractor can get complicated.

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GIg work is typically offered through an online platform like an app or a website and is considered any activity you do to earn income.  The work can be project-based, hourly or part-time, and can be an ongoing contract or a temporary position. 

These platforms match workers’ services or goods with customers. Platforms provide access to ridesharing services, delivery services, property and space rentals and more. 

According to the IRS, you’re required to report all income earned through gig work on your tax return, even if the income is:

  • From part-time or temporary work.
  • Not reported on an information return.
  • Paid in any form, including cash, property, goods or virtual currency.

If you’re a gig worker, the IRS says to collect and keep records and receipts throughout the year. Save receipts of your expenses to lower your taxable income and track all income from gig work and sales, even if you don’t receive Form 1099s from clients. Record keeping can help you track your income, deduct expenses and accurately complete your tax return. 

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Independent contractors must also pay quarterly taxes since taxes are not being withheld from a paycheck. If you don’t pay enough taxes on time, you could incur a penalty. Estimated taxes are due four times a year: April 15, June 15, Sept. 15 and Jan. 15. However, if these dates fall on a Saturday, Sunday or legal holiday, the payments are due the next business day.

You can pay quarterly taxes online, by mail or over the phone.

The businesses you work with may send forms to the IRS to report payments made to you. If they do, you should receive copies of these forms by Jan. 31. Even if you don’t receive a 1099 or W-2, you should still report all payments from sales receipts.

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To file as an independent contractor, you may need to fill out these forms:

  • Form 1040, U.S. Individual Income Tax Return or Form 1040-SR, U.S. Tax Return for Seniors.
  • Schedule SE (Form 1040), Self-Employment Tax.
  • Schedule C (Form 1040), Profit or Loss from Business (Sole Proprietorship).

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About the Author

Josephine Nesbit is a freelance writer specializing in real estate and personal finance. She grew up in New England but is now based out of Ohio where she attended The Ohio State University and lives with her two toddlers and fiancé. Her work has appeared in print and online publications such as Fox Business and Scotsman Guide.
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