Gig Work and Taxes

The gig economy is constantly changing and growing. From side hustles to a primary source of income, many people have turned to gig work due to its flexibility, accessibility, and increased demand. Whether you are a ride share driver, personal shopper, pick up freelance work, or tutor online, if you earn income, you must report it. Here are four things that will help you at tax time:

  1. Keep records of income. Being a gig worker means you are probably working as a freelancer or independent contractor. You are responsible for reporting all income you received, even if it’s a cash payment.
  2. Keep records of expenses. Filing as an independent contractor or freelancer means your income will be considered self-employment income, subjecting you to self-employment taxes. Your taxable income may be offset by your expenses, which will reduce the taxes you owe.
  3. Update your W-4. Is this a side hustle? Are you also employed? You can update your W-4 to withhold your employee taxes at a higher rate to help pay your self-employment taxes.
  4. Make estimated tax payments. If you are doing fairly well in your gig work and expect to owe more than $1,000 in taxes, you should start making quarterly estimated tax payments. Paying your estimated taxes will not only lessen your annual tax bill, it will also prevent additional penalties, such as the underpayment penalty.

If you are a gig worker and tax season has you anxious, you don’t have to do this alone. At IOOGO, we work with many gig workers and will help you get every available deduction. Need someone to look over your books and help organize your expenses? We have experts for that too. Contact us today!

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