Category

freelancers/independent contractors

Category

https://player.captivate.fm/episode/ca5e52fd-cedc-49e3-af90-03d0bfeefdea In 2017, the Bureau of Labor Statistics found that over 36% of Americans are a part of “the gig economy,” a dramatic increase from 2-4% in 2005. This is the most recent data available and does not account for pandemic numbers. Those jobs aren’t just paid differently, there are different tax consequences too, from Form 1099 reporting requirements to paying self-employment taxes. Contractor and freelancer taxes can feel complex, how do you sort it all out for your unique circumstances? Self-employment taxes don’t have to be intimidating. In today’s episode of the Taxgirl podcast, Kelly is joined by Sagar Shah to sort out what it means to be part of the gig economy. Sagar is a CPA and the managing partner at his firm, as well as the managing member of his real estate investment fund. Prior to opening his firm, Sagar worked for KPMG. Now, many of the…

It’s not just the federal race that made news on Election Day: state and local initiatives were on also on the ballot. In California, that included a vote on whether gig drivers like those who work for Lyft, Uber, and DoorDash, should be considered employees: 58% of voters decided that they should instead be classified as independent contractors. According to the California Secretary of State, the initiative measure – officially known as Proposition 22 – “establishes different criteria for determining whether app-based transportation (rideshare) and delivery drivers are ‘employees’ or ‘independent contractors.’” By law, independent contractors are not entitled to certain protections afforded employees, including minimum wage, overtime, unemployment insurance, and workers’ compensation. The Proposition also notes that, “companies with independent-contractor drivers will be required to provide specified alternative benefits, including: minimum compensation and healthcare subsidies based on engaged driving time, vehicle insurance, safety training, and sexual harassment policies.” A…

Last year, the Internal Revenue Service introduced a draft version of a form that we haven’t seen since 1982: Form 1099-NEC, Nonemployee Compensation. Form 1099-NEC is intended to replace the nonemployee compensation part of a form many of us have come to know and love: Form 1099-MISC, Miscellaneous Income. Form 1099-MISC is sticking around for other things, like reporting gross proceeds to an attorney, Section 409A deferrals, and nonqualified deferred compensation income. But nonemployee compensation – money paid to freelancers, independent contractors, gig workers, and others that aren’t employees – will now be reported on Form 1099-NEC. Who Gets A Form 1099-NEC? The IRS says that trades or businesses need to issue Form 1099-NEC if the following four conditions are met: You made the payment to someone who is not your employee.You made the payment for services in the course of your trade or business (including government agencies and nonprofit…

Estimated payments for the third quarter are due September 15, 2020. You can find out more about the deadline here. But you need a little more information, you’re in luck! The Internal Revenue Service (IRS) has, at part of its video series, a YouTube video about estimated payments: https://youtu.be/7PWcQGMdvP8 The IRS notes that you can learn even more details at https://www.irs.gov/payasyougo.

It doesn’t feel like it could be September already, but it is. And you know what that means: estimated payments are now due. The deadline for making your third quarter estimated tax payments for 2020 is September 15. Who Needs To Make Estimated Payments? Generally, you should make estimated tax payments if you are not subject to withholding. Realistically, this means that folks who rely on income reported on a Form 1099 (like self-employment income, interest, dividends, and retirement income) are most likely to be responsible for estimated tax. If you’re self-employed, a gig economy worker, a retiree with a pension or other income, or a partner in a partnership or LLC, this likely applies to you. You will need to make estimated payments if you: You expect to owe at least $1000 in tax for the 2020 tax year after subtracting your withholding and credits.You expect your withholding and…

Confused about your estimated payment deadline? You’re not alone. The series of events leading up to the extension for estimated payments (not once, but twice) has left many taxpayers bewildered. Here’s what you need to know. In response to COVID-19, the Internal Revenue Service (IRS) announced in March that the tax filing season had been pushed to July 15, 2020. It wasn’t until April, however, that the IRS made clear that the relief applied to estimated tax payments due June 15, 2020. Previously, the relief only applied to the April 15, 2020, estimated payments – which had the absurd result of having second quarterlies (due June 15, 2020) due before first quarterlies (moved to July 15, 2020). As a result, some taxpayers remain confused. Here are some additional details to help you sort it all out: When are estimated payments due for the first quarter of the 2020 tax year (those…

Scrambling to make estimated payments? Don’t worry! The Internal Revenue Service (IRS) is reminding taxpayers that estimated tax payments for the tax year 2020, ordinarily due April 15, 2020, and June 15, 2020, are now due July 15, 2020.  The extended deadline means that any individual or corporation that has a quarterly estimated tax payment due April 15, 2020, or June 15, 2020, has until July 15 to make that payment without penalty. The extension is part of the IRS response to the COVID-19 pandemic. Generally, you should pay estimated tax if you are not subject to withholding. Realistically, this means that folks who rely on income reported on a Form 1099 (like self-employment income, interest, dividends, and retirement income) are most likely to be responsible for estimated tax. If you’re self-employed, a gig economy worker, a retiree with a pension or other income, or a partner in a partnership or LLC, this…

Over a month ago, I wrote an article about the home office deduction that attracted very little notice. I figured folks were either overwhelmed with COVID-19 coverage, or the article didn’t apply to them. More recently, I realized that I was wrong: taxpayers assumed the article didn’t apply to them. Since then, I’ve received tweets, comments, and emails from workers asking about the deduction because they’re sure that it applies to them. They are, after all, working from home through no reason of their own. They cannot physically return to the office or other workplace. And their employer may require them to work from home as a condition of their employment. In other words, for many, it’s work from home or lose a paycheck. Those all feel like excellent reasons to be able to deduct the cost of the internet and other home office expenses. But they are not enough. As a result of…

As COVID-19 continues to impact the United States, the federal government is taking action to ease the burden on taxpayers. Most recently, Congress passed a massive stimulus package that was signed into law by the President. The stimulus bill (also called the Coronavirus Aid, Relief, and Economic Security Act, or the CARES Act) has several moving pieces for taxpayers, including those stimulus checks for taxpayers. But the law also offers some provisions intended to combat rising unemployment: 6.6 million Americans filed for unemployment benefits last week. One of those provisions is the Employee Retention Credit or ERC. It’s found in the CARES Act in Section 2301. The ERC is designed to help businesses keep employees on payroll. The credit is available to employers, no matter the size of the business. Unlike some of the other relief, there is no cap on the number of employees. The average number of employees in 2019 will, however, affect how the credit…

It’s true: Simple is hard. In an effort to make things easier for taxpayers and tax forms issuers, the Internal Revenue Service (IRS) is bringing back form 1099-NEC, Nonemployee Compensation. If that rings a bell, you’re showing your age: we haven’t seen this form since 1982. The IRS initially announced the return of form 1099-NEC in August of this year. Now, we have an updated draft. Here’s what it looks like: The form will replace parts of the everything-but-the-kitchen-sink form 1099-MISC, Miscellaneous Income, for some taxpayers. Ironically, form 1099-MISC was the form that replaced form 1099-NEC in the first place (is your head spinning yet?). Why the need for the change again? The Protecting Americans from Tax Hikes Act of 2015 (PATH Act) that was enacted on December 18, 2015, made several changes to the way we file taxes. Specifically, under the PATH Act, employers were required to furnish some forms 1099-MISC to…

Skip to content