{"id":3460,"date":"2020-04-05T03:51:18","date_gmt":"2020-04-05T03:51:18","guid":{"rendered":"https:\/\/www.irstaxapp.com\/?p=3460"},"modified":"2020-04-05T03:56:36","modified_gmt":"2020-04-05T03:56:36","slug":"how-gig-economy-worker-can-prevent-tax-penalties","status":"publish","type":"post","link":"https:\/\/www.irstaxapp.com\/how-gig-economy-worker-can-prevent-tax-penalties\/","title":{"rendered":"How Gig Economy Worker Can Prevent Tax Penalties !"},"content":{"rendered":"\n<p>What is a Gig? The Oxford dictionary defines a Gig as <em>&#8220;a performance by musicians playing popular music or jazz in front of an audience; a similar performance by a&nbsp;comedian&#8221;.<\/em> <\/p>\n\n\n\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_62 counter-hierarchy ez-toc-counter ez-toc-grey ez-toc-container-direction\">\n<p class=\"ez-toc-title\">Table of Contents<\/p>\n<label for=\"ez-toc-cssicon-toggle-item-662d97c39905c\" class=\"ez-toc-cssicon-toggle-label\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/label><input type=\"checkbox\"  id=\"ez-toc-cssicon-toggle-item-662d97c39905c\"  aria-label=\"Toggle\" \/><nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/www.irstaxapp.com\/how-gig-economy-worker-can-prevent-tax-penalties\/#What_is_gig_economy\" title=\"What is gig economy?\">What is gig economy?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/www.irstaxapp.com\/how-gig-economy-worker-can-prevent-tax-penalties\/#What_a_gig_worker_must_know_about_tax_compliance\" title=\"What a gig worker must know about tax compliance?\">What a gig worker must know about tax compliance?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/www.irstaxapp.com\/how-gig-economy-worker-can-prevent-tax-penalties\/#Why_how_to_file_tax_return\" title=\"Why &amp; how to file tax return?\">Why &amp; how to file tax return?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/www.irstaxapp.com\/how-gig-economy-worker-can-prevent-tax-penalties\/#Why_how_to_pay_estimated_tax\" title=\"Why &amp; how to pay estimated tax?\">Why &amp; how to pay estimated tax?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/www.irstaxapp.com\/how-gig-economy-worker-can-prevent-tax-penalties\/#How_and_what_records_to_be_maintained_by_a_gig_worker\" title=\"How and what records to be maintained by a gig worker?\">How and what records to be maintained by a gig worker?<\/a><\/li><\/ul><\/nav><\/div>\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"What_is_gig_economy\"><\/span>What is gig economy?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>But , nowadays, a gig is not just music or jazz but all sorts of small jobs  that a person or entities does for a price.The growth of internet and consequential online businesses have added another dimension to economy called &#8220;gig economy&#8221;.The volume and numbers of small jobs or on-demand services are so great that a whole lot of young and skilled persons are earning income ,specially through a digital platform like an app or website.Therefore , &#8220;Gig Economy&#8221; is defined by Oxford dictionary as &#8220;a labour market characterised by the prevalence of short-term contracts or freelance work as opposed to permanent jobs&#8221;.The following list is just few examples of gig works that people do and earn :<\/p>\n\n\n\n<ul><li>Drive a&nbsp;car for booked rides or deliveries<\/li><li>Rent out property or part of it<\/li><li>Run errands or complete tasks<\/li><li>Website creation<\/li><li>Voiceover or video recording against fee<\/li><li>Writing articles, blogs against fee<\/li><li>a graphic designer who charges based on an hourly rate; or<\/li><li>a wedding photographer charging a flat rate<\/li><li>Sell goods online<\/li><li>Rent equipment<\/li><li>Provide any kind of creative or professional services<\/li><li>Provide other temporary, on-demand or freelance work<\/li><\/ul>\n\n\n\n<p>The list of gig economy works or services are endless. <\/p>\n\n\n\n<blockquote class=\"wp-block-quote is-style-large\"><p>One central rule to keep in mind is that if you are not employee of any one and do jobs or give services against a fee, you are a gig worker and part of gig economy<\/p><\/blockquote>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"What_a_gig_worker_must_know_about_tax_compliance\"><\/span>What a gig worker must know about tax compliance?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Here are three simple rules that every gig worker must know and follow<\/p>\n\n\n\n<ol><li>File tax return<\/li><li>Pay estimated Tax<\/li><li>Keep records of earning &amp; expense<\/li><\/ol>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Why_how_to_file_tax_return\"><\/span>Why &amp; how to file tax return?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>If your net earning from self employment is more than $400 , you will have to file tax return by due date . Else there will <a href=\"https:\/\/www.irstaxapp.com\/failure-to-pay-file-penalty-calculator\/\">penalty for failure to file<\/a>. A self employed person or  gig worker should still file a return specially if there is a\u00a0business losses\u00a0because you can carry forward the business loss to adjust with business income in future years.If you do not file, you loss the benefit of carry forward business losses.<\/p>\n\n\n\n<p>If you are worried about how to file tax return ,IRS has signed agreement with tax filing software vendors to provide free filing. Read <a href=\"https:\/\/www.irstaxapp.com\/free-online-tax-filing-services-2020\/\">10 free online tax filing IRS approved services for 2020<\/a>. It is better if you have printed <a href=\"https:\/\/www.irstaxapp.com\/tax-filing-preparation-checklist\/\">tax filing cheatsheet.<\/a><\/p>\n\n\n\n<p>The tax return has to be filed within due dates , which is extended on account of Coronavirus to 15th July for 2019 returns for due date was 15th April. <a href=\"https:\/\/www.irstaxapp.com\/2020-tax-filing-season-12-changes-for-2019-tax-returns-you-need-to-remember\/\">12 Changes For 2019 TAX Returns You Need To Remember<\/a><\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Why_how_to_pay_estimated_tax\"><\/span>Why &amp; how to pay estimated tax?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>You may  have to pay estimated tax in the current year . This depends on how much tax was withheld on your gig earnings. If there is shortfall in taxes as on date of filing tax return, you are liable to penalty for failure to pay taxes.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">How to calculate estimated tax?<\/h3>\n\n\n\n<p>You can use&nbsp;<a href=\"https:\/\/www.irs.gov\/publications\/p505\/ch02.html#en_US_2017_publink1000300813\" target=\"_blank\" rel=\"noopener\">Worksheet 2.1<\/a>&nbsp;in IRS Form 1040-ES,&nbsp;<em>Estimated Tax for Individuals<\/em>&nbsp;to figure out whether you must pay estimated tax. You\u2019ll need to calculate this information:<\/p>\n\n\n\n<ul><li>adjusted gross income,<\/li><li>taxable income,<\/li><li>taxes,<\/li><li>deductions, and<\/li><li>credits.<\/li><\/ul>\n\n\n\n<p>You can also use IRS tool &#8211;&nbsp;<a href=\"https:\/\/www.irs.gov\/individuals\/tax-withholding-estimator\" target=\"_blank\" rel=\"noopener\">Tax Withholding Estimator<\/a>.Click&nbsp;<a href=\"https:\/\/blog.taxact.com\/calculate-and-make-estimated-tax-payments\/\" target=\"_blank\" rel=\"noopener\">here<\/a>&nbsp;for more detailed information on how to calculate your payment. Or check out the&nbsp;<a href=\"https:\/\/www.irs.gov\/publications\/p505\/index.html\" target=\"_blank\" rel=\"noopener\">IRS Publication 505 (2017), Tax Withholding and Estimated Tax<\/a>.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">What are the d<strong>ue dates for  estimated tax payments<\/strong>?<\/h3>\n\n\n\n<p>Estimated tax , if any has to be paid in four quarters. These are <\/p>\n\n\n\n<ul><li><strong>April 15<\/strong>&nbsp;for payment period January 1\u2013March 31<\/li><li><strong>June 15<\/strong>&nbsp;for payment period April 1\u2013May 31<\/li><li><strong>September 15<\/strong>&nbsp;for payment period June 1\u2013August 31<\/li><li><strong>January 15<\/strong>&nbsp;for payment period September 1\u2013December 31<\/li><\/ul>\n\n\n\n<p><strong>For the year 2020, the <\/strong>date for first quarter of <a href=\"https:\/\/www.irstaxapp.com\/coronavirus-relief-for-payment-of-2019-tax-due-not-for-filing-tax-return\/\">estimated tax payment has been extended on account of Covid-19 pandemic.<\/a><strong>You should fill &nbsp;<a href=\"https:\/\/www.irs.gov\/forms-pubs\/about-form-1040-es\" target=\"_blank\" rel=\"noopener\">Form 1040-ES<\/a><\/strong> and <strong>can <a href=\"https:\/\/www.irs.gov\/payments\" target=\"_blank\" rel=\"noopener\">pay online <\/a>the estimated tax <\/strong>Pay online&nbsp;or by mail or phone<\/p>\n\n\n\n<p>If you do not pay estimated tax , there is provision of levy of estimated tax penalty. Read <a href=\"https:\/\/www.irstaxapp.com\/faqs-on-penalty-for-underpayment-of-estimated-tax\/\">FAQ on estimated tax penalty<\/a><\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"How_and_what_records_to_be_maintained_by_a_gig_worker\"><\/span>How and what records to be maintained by a gig worker?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>You will have to maintain books of accounts. In other words, the gig workers must keep record of earnings and related expenses.This will help self employed persons in proper accounting of income, deduction of expenses and finally complete the tax return error free. Following publication by IRS will help gig workers in further reading on subject of record keeping :<\/p>\n\n\n\n<ul><li><a href=\"https:\/\/www.irs.gov\/forms-pubs\/about-publication-535\" target=\"_blank\" rel=\"noopener\">Publication 535<\/a>, Business Expenses<\/li><li><a href=\"https:\/\/www.irs.gov\/forms-pubs\/about-publication-583\" target=\"_blank\" rel=\"noopener\">Publication 583<\/a>, Starting a Business and Keeping Records<\/li><li><a href=\"https:\/\/www.irs.gov\/forms-pubs\/about-publication-527\" target=\"_blank\" rel=\"noopener\">Publication 527<\/a>, Residential Rental Property (Including Rental of Vacation Homes)<\/li><\/ul>\n\n\n\n<p><\/p>\n","protected":false},"excerpt":{"rendered":"<p>What is a Gig? The Oxford dictionary defines a Gig as &#8220;a performance by musicians playing popular music or jazz in front of an audience; a similar performance by a&nbsp;comedian&#8221;. What is gig economy? But , nowadays, a gig is not just music or jazz but all sorts of small jobs that a person or [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":3487,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[147],"tags":[1357,1362,1361,1360,1363,1358],"amp_enabled":true,"_links":{"self":[{"href":"https:\/\/www.irstaxapp.com\/wp-json\/wp\/v2\/posts\/3460"}],"collection":[{"href":"https:\/\/www.irstaxapp.com\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.irstaxapp.com\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.irstaxapp.com\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.irstaxapp.com\/wp-json\/wp\/v2\/comments?post=3460"}],"version-history":[{"count":0,"href":"https:\/\/www.irstaxapp.com\/wp-json\/wp\/v2\/posts\/3460\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.irstaxapp.com\/wp-json\/wp\/v2\/media\/3487"}],"wp:attachment":[{"href":"https:\/\/www.irstaxapp.com\/wp-json\/wp\/v2\/media?parent=3460"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.irstaxapp.com\/wp-json\/wp\/v2\/categories?post=3460"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.irstaxapp.com\/wp-json\/wp\/v2\/tags?post=3460"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}