The Gig Could Be Up For Some Gig Workers
The gig economy may soon lose its appeal for some gig workers as soon as they get wind that the IRS is out to dig deeper into their earnings. A new bill has amended the tax code to require Uber, Lyft and other platform companies to tell their contract workers how much money they have made annually. The new law goes into effect with the 2022 tax year. Up until then, platform companies only have to report the incomes of contract workers with a very large number of transactions and earnings of $20,000 or more. But the new law requires those companies to send contract workers forms if their gross income exceeds $600 annually.
What might have begun as a way to supplement an income pre-pandemic has, for many, become the only way to put food on the table as more and more businesses furlough employees. The fact is that keeping track of taxes can be difficult for gig workers. As Bloombergtax.com points out, “The tax code was written for established businesses that hire bookkeepers, not people with side jobs they can set up overnight with an app.” https://news.bloombergtax.com/daily-tax-report/the-stimulus-laws-gig-economy-tax-provision-explained
People who are self-employed – and ride share drivers are considered self-employed – have to make quarterly estimated tax payments. They are also required to pay double the Social Security and Medicare tax rates that typical employees pay. Many gig workers are not aware of this, and many are not keeping track of their taxes at all. That means they are at risk getting audited and owing back taxes they aren’t prepared for and can’t afford.”
If you are working in the gig economy and want to get ahead of the IRS curve, give my office a call. We can get you set up to keep working and stay out of the IRS’s crosshairs come 2022.