Tax Tips for Gig Economy Entrepreneurs and Workers – L’Observateur

In recent years, the gig economy has changed the way people do business and provide services. Taxpayers are required to report gig economy income on their tax returns, regardless of whether they earn it part-time, casually, or on the side. The IRS’s Gig Economy Tax Center provides information and resources to help entrepreneurs and workers in this group understand and meet their federal tax obligations.

Here are some important things to remember for individuals involved in the gig economy as they prepare to apply in 2023.

Gig Economy Income Is Taxable

• Taxpayers are required to report all income on their tax returns regardless of whether they receive an information return such as a 1099, unless exempted by law.
• Individuals involved in the gig economy may also be required to make estimated quarterly tax payments to pay income and self-employment taxes, including Social Security and Medicare taxes. The final estimated tax deadline for 2022 is approaching January 17, 2023.

Workers report their income according to the worker’s classification
Gig economy workers who provide services such as driving for reserved rides, running errands, or performing other on-demand tasks must be classified correctly. Classification helps taxpayers determine how to properly report their income.

The business or platform determines whether the individuals providing services are employees or independent contractors. Business owners can use the IRS.gov worker classification page to get guidance on properly classifying employees and independent contractors.

Expenses related to gig economy income may be deductible
Individuals involved in the gig economy may be able to deduct expenses related to their gig income, subject to tax restrictions and regulations.

pay the appropriate amount of taxes throughout the year
Employers typically withhold income tax from their employees’ paychecks to cover the taxes they owe.

Individuals participating in the gig economy have two ways to pay their taxes.

For more information:
Publication 525 Taxable and exempt income
Publication 1779, Independent Contractor or Employee