Last year, I wrote a blog for Henry + Horne about how slow the IRS has been to adapt to the on-demand economy. In it, I quoted a report from the Kogod Tax Policy Center that found:
- 1/3 of on-demand workers did not know whether they were required to file quarterly estimated tax payments
- 36% were not familiar with the kinds of records they would need to maintain to substantiate income and expenses for their work
- 43% had no idea how much they would owe in tax for their on-demand work and had not set aside money for taxes
- 1/2 were unfamiliar with deductions and credits that could be used to offset their self-employment income
Last year, I worked with a young lady that drove for one of the ride-sharing companies and got into a bit of tax trouble. It seems she never received a 1099 from the company and wasn’t aware that the money she made was taxable income, so she didn’t do a good job of tracking expenses. A couple years later, she received a notice from the IRS telling her she owed thousands of dollars in back taxes, interest, and penalties.
Fortunately, we were able to help her recreate her records enough to have some documented expenses to offset that income and get her tax bill lowered. But the situation just reinforced how little information many of these workers receive about the tax implications of the gig economy.
So I was excited to write this piece for Credit Karma Tax, providing step-by-step instructions for on-demand workers to file their tax return – for free! – using Credit Karma Tax.
All you need to do is sign up for a free Credit Karma account and follow the instructions to report business income from any 1099-MISCs and 1099-Ks you receive from any ride-share companies and any income you earned from ride-sharing work that wasn’t reported on a 1099.
If you know anyone working in the gig economy, feel free to pass this along!