SOURCE: Jackson Hewitt Tax Service

Jackson Hewitt Tax Service

April 11, 2017 09:29 ET

Five Tips for New "Gig" Economy Taxpayers from Jackson Hewitt®

Many in this Growing Workforce Do Not Understand the Rules of Being Self-Employed

JERSEY CITY, NJ--(Marketwired - Apr 11, 2017) - The number of Americans working in the new "gig" economy is growing fast. The IRS says more than 2.5 million taxpayers are currently participating in the on-demand platform economy and conservative estimates have that number more than doubling in the next few years.

While the idea of a "gig" instead of a job is new, the treatment of this income falls under more traditional self-employment income. For those who do short-term contract jobs and move on, such as driving people to the airport or renting out their home for the weekend, Jackson Hewitt Tax Service® offers these five tips to take some of the confusion out of filing taxes.

  • Organize all income related forms, such as 1099-K and 1099-MISC. Also calculate the total of all income you received that was not reported on a Form 1099. This includes payments of less than $600 by an individual or business, and payments by check, cash or the value of other goods received in payment. If you do not receive a 1099, your income does get reported. Companies keep records of what was paid to individuals and that goes to federal and state agencies.
  • Include tips in the total income calculation. Tips are considered self-employment income and must be included in tax returns.
  • Don't forget expenses you paid to do the jobs. Track the days you rent all or part of your house, the miles you drive your car for the year as well as the miles driven for your business. Make sure you have the receipts for all the items you purchased for your business and include that expense. In addition, you can include licensing and professional fees, business insurance, bank fees, business cards, advertising expenses and continuing education costs.
  • If you have a space in your home you use only to run your business, you may deduct an expense for your in home office. This is allowed for both renters and homeowners.
  • Finally, make quarterly estimates and tax payments. You need to pay 90% of your total tax bill by January 15 next year or you could be penalized.

"Typically, the IRS collects the prepaid taxes through withholding," says David Prokupek, Co-CEO of Jackson Hewitt Tax Service. "Since self-employed taxpayers have no taxes deducted from their pay, they must make estimated tax payments four times a year. Jackson Hewitt can help."

There are many rules governing income and deductions for self-employed taxpayers. The tax professionals at Jackson Hewitt understand the rules and are available year-round to help. To find an office near you, visit www.JacksonHewitt.com/OfficeLocator.

About Jackson Hewitt Tax Service Inc.
Jackson Hewitt Tax Service Inc. is an innovator in the tax industry, with a mission of offering its hard-working clients access to simple, low-cost solutions to manage their taxes and tax refunds. Jackson Hewitt is devoted to helping clients get ahead with Maximum Refund and 100% Accuracy Guarantees. With approximately 6,000 franchised and company-owned locations, including 3,000 in Walmart stores and online and mobile tax solutions Jackson Hewitt makes it convenient for clients to file their taxes. For more information about products, services and offers, or to locate a Jackson Hewitt office, visit www.JacksonHewitt.com or call 1 (800) 234-1040.

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