Three Ways You Should be Preparing for Tax Season as Gig Workers
Over the past several years many have joined the growing population of self-employed, contractors, and gig workers. If you have recently created an alternative revenue stream for yourself, make sure that you are preparing yourself for a smooth and worry-free tax season before it hits.
- Contribute to an IRA
If you are solely self-employed, you don’t have the retirement saving advantage of an employer-provided 401(k) plan, but you can still save for retirement and deduct those retirement contributions from your personal income taxes with a retirement savings account such as an SEP IRA. - Take advantage of medical insurance deductions
Health insurance premiums can be deductible even if the policy is not in the name of the business. If your health insurance is purchased through the marketplace, be sure you are calculating your total monthly premium accurately, including any tax credit that is applied. - Get your paperwork in order early and often
As a gig worker or self-employed individual, it can be a challenge to keep track of all the relevant paperwork and divide the professional expenses from the personal. Form a daily habit of tracking every business expense and keep all receipts and invoices. Don’t forget to include documentation of all transactions made through payment services like PayPal or Venmo. There are plenty of automated software packages that can take this task from an arduous monthly time-eater to a quick 10 minute task. Well-documented business expenses can also translate into business deductions on your completed taxes, saving you time and money. Avoid errors and make sure you are receiving your maximum deduction by working with a certified public accountant to complete your taxes. The cost of this service can also be written off as a deductible business expense.
Self-employment will add extra steps and forms to your tax filing, but if you are keeping good track of your expenditures and income, it does not need to be difficult when it's time to file your returns. Please consult your tax advisor to discuss any potential deductible items as these may change.
This material is generic in nature. Before relying on the material in any important matter, users should note date of publication and carefully evaluate its accuracy, currency, completeness, and relevance for their purposes, and should obtain any appropriate professional advice relevant to their particular circumstances.
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