New Gig Economy Tax Center on IRS Website
The “Gig Economy”-independent workers paid for a task or project (i.e., a “gig”)- isn’t new, but it has grown exponentially over the last decade, especially with the help of smartphone-based technology. Companies like Uber, Airbnb or TaskRabbit have made it very attractive and easy for independent workers to receive payment for performing a specific gig. However, many of the companies providing the services and the individuals performing them don’t fully understand their tax obligations in the gig economy.
On January 9, 2020, the IRS issued a news release which announces its launch of the new “Gig Economy Tax Center” on IRS.gov.This new resource provides “streamlined information” intended to assist taxpayers in the gig economy with meeting their tax obligations. According to the IRS:
Educating gig economy workers about their tax obligations is vital because many don’t receive form W-2s, 1099s or other information returns for their work in the gig economy. However, income from these sources is generally taxable, regardless of whether workers receive information returns. This is true even if the work is fulltime, part-time or if the person is paid in cash. Workers may also be required to make quarterly estimated income tax payments, pay their share of Federal Insurance Contribution (FICA), Medicare and Additional Medicare taxes if they are employees and pay self-employment taxes if they are not considered to be employees.
The IRS notes that the new Gig Economy Tax Center provides resources that offer easily accessible information about tax implications for the companies that provide the servicesandthe individuals who perform the services. The IRS highlights the availability of tips and resources covering the following topics:
- filing requirements
- making quarterly estimated income tax payments
- paying self-employment taxes
- paying FICA, Medicare and Additional Medicare
- deductible business expenses
- special rules for reporting vacation home rentals
Taxpayers can find the center via https://www.irs.gov/businesses/gig-economy-tax-center.
If you have questions or concerns about your tax obligations in the gig economy, contact Frost Law today at 410-497-5947.
IR-2020-04 (Jan. 9, 2020).