Tax Day 2023 is closing in, and the burden for gig staff is slightly heavier since you’re thought of unbiased contractors — not staff — of the favored app-based corporations you’re employed for.
After years of submitting extensions due to the pandemic, final yr marked the return to a extra acquainted April deadline. Equally, this yr’s deadline to file your federal taxes is April 18.
Whereas seasoned freelancers and gig staff probably know the drill in the case of the method of submitting your individual taxes, it may be a frightening job for anybody new to the business. The important thing factor to recollect is that you just’re chargeable for reporting your gig work revenue for each shopper or firm that paid you greater than $600 in 2022.
One cause for all of the confusion? Your tax paperwork could not have arrived by way of snail mail (the way in which they sometimes would with a full-time employer) — particularly as increasingly corporations begin providing digital copies of tax submitting paperwork.
Regardless, you need to have acquired all the things you want (on paper, digitally, or each) from any corporations you contracted with by Jan. 31. In any yr, if you happen to haven’t gotten something by late February, attain out ASAP.
Right here’s a rundown of the tax kinds you’ll want to make use of as a gig employee – plus a take a look at the tax insurance policies of 5 of the most well-liked gig app corporations: Instacart, DoorDash, Grubhub, Lyft and Uber.
Frequent Tax Kinds for Gig Employees
Within the eyes of the IRS, you’re a self-employed employee. Which means it’s as much as you to compile the suitable tax kinds and precisely report your revenue.
Frequent Earnings Kinds Despatched to You
Firms that paid you greater than $600 in a calendar yr ought to ship you a 1099 (both digitally or within the mail), as required by regulation. When you work throughout a number of apps, it’s doable you’ll obtain a 1099 from every firm. And relying on what corporations you’re employed for, you could obtain as much as three several types of 1099 per firm.
The 1099-NEC was launched in 2020 and is the principle tax type that’s now used to report nonemployee compensation of $600 or extra. Many corporations beforehand used the 1099 MISC (Field 7) to report this revenue, and if you happen to’re an unbiased contractor who used to obtain that type, you’ll probably now obtain this one as a substitute. On this new type, you’ll use the quantity in Field 1 to report your self-employment revenue.
The 1099-Okay type is one other frequent type despatched to gig staff. Beforehand, staff needed to meet sure thresholds to obtain this manner (ie. supply a sure variety of rides by way of Lyft or Uber or earn a certain quantity in a calendar yr). Starting in 2022, anybody receiving funds exceeding $600 by way of a 3rd occasion community or debit/bank card transactions will get this manner, whatever the variety of transactions they accomplished.
NOTE: On December 23, 2022 the IRS introduced it will deal with the 2022 tax yr as a transition yr for this new coverage. Translation? It’s possible you’ll or could not get this manner from any firm you labored for relying on how a lot you earned and whether or not or not they adopted the initially proposed 2022 pointers.
When you personal a enterprise that accepts credit score or debit card funds, drive for a rideshare firm, or promote stuff on varied on-line platforms— you could obtain this manner. Self-employed staff ought to use this manner (together with the NEC) to report gross revenue earnings for the yr. Pay particular consideration to Field 1a (your web revenue) in addition to Packing containers 5a-5l (your web revenue month-by-month) to grasp how a lot cash you acquired by way of third occasion networks.
The 1099-MISC, quick for miscellaneous revenue, has undergone lots of adjustments over the previous years with a purpose to accommodate the creation of the brand new 1099 NEC tax type. Like we talked about up prime, this manner was once the primary tax type for gig staff and unbiased contractors. However in 2023? Not a lot.
Whereas you should still obtain this manner as a gig employee, it received’t essentially be due to your job. These receiving the 1099-MISC these days are sometimes getting it for causes like gathering at the least $600 or extra in lease, medical funds, or prizes and awards. When you do occur to get one in every of these kinds, simply do not forget that the quantities listed on it can must be reported as revenue.
Tax Return Kinds You Ship to the IRS
After you’ve tracked down all of your 1099s and tallied up your web revenue, the next move is to get that quantity as little as doable by subtracting any and all relevant enterprise bills and deductions.
Most Uber and Lyft drivers don’t meet the 1099-Okay threshold and received’t obtain this manner. Once more, even when they don’t ship you the shape, you might be nonetheless chargeable for reporting your earnings.
As a gig employee, you could have to file the next tax kinds with the IRS:
- Type 1040: That is now the principle type utilized by all U.S. taxpayers to file an annual revenue tax return. (Kinds 1040S and 1040EZ are not out there.)
- Schedule C: is a sub-form of the 1040 used to tally up your revenue and loss as an unbiased contractor. Line No. 1 is the place you report gross revenue from all 1099s or from the revenue abstract supplied in your gig app. The following packing containers are examples of enterprise bills you could use to decrease your taxable revenue. Line No. 31 is your web revenue, a quantity you’ll want for the Schedule SE.
- Schedule SE: That is one other 1040 sub-form for self-employed (gig) staff. Use it to calculate your self-employment tax.
- Schedule 2: is an “extra tax type,” i.e. the place you present the quantity you owe in self-employment taxes from the SE type above. Put that determine on line No. 4 and the grand complete on line No. 21.
- Type 1040-ES: Use this manner, as a substitute of the usual 1040 if you should file quarterly taxes.
You will need to file a tax return when you’ve got web earnings from self-employment of $600 or extra from gig work, even when it’s a facet job, part-time or short-term.
Tax Insurance policies and Sources of 5 Fashionable Apps
What kinds you obtain and what tax service you select to file with will depend on the corporate you’re working for. Every firm has barely totally different tax insurance policies and will supply reductions for various tax-filing software program providers. Right here’s how they stack up.
Feeling overwhelmed? When you’re nervous about making errors, we suggest utilizing tax software program like H&R Block, TurboTax or TaxAct.
DoorDash
DoorDash companions with Stripe. Based on the corporate, you could have acquired a 1099-NEC by way of Stripe e-delivery by December 31, 2022. The corporate not sends contractors particulars on their mileage, however as a substitute recommends signing up with a mileage monitoring app like Everlance to trace your miles all through the tax yr and see if you happen to qualify for any exemptions. Evaluation DoorDash’s tax FAQ for extra info. When you haven’t acquired your 1099-NEC or your mileage info, contact DoorDash buyer help.
Major tax type: 1099-NEC.
Who: Dashers who earned greater than $600 the earlier calendar yr.
How: Digital type (until you opted for paper supply as a substitute).
Instacart
Very similar to DoorDash, Instacart has partnered with Stripe to offer tax kinds to its contractors. When you earned $600 or extra with the corporate in 2022, you need to count on to obtain an e mail containing tax info from Stripe or Instacart by early January 2023—at which level it is possible for you to to obtain your kinds from Stripe Categorical. If in case you have any points receiving your kinds, or have questions, you possibly can attain out to the corporate by logging into the Shopper Serving to Heart.
Major tax type: 1099-NEC.
Who: Instacart consumers who earned greater than $600 the earlier calendar yr.
How: Digital type.
Grubhub
When you’re a Grubhub driver who earned greater than $600 in 2022, and are enrolled in digital communications, then you need to have acquired your 1099-NEC by way of e mail by the top of January 2023. When you opted out of digital tax communications, you then probably acquired a mailed copy of the shape across the similar time.
Go to Grubhub’s taxes FAQ for extra info. When you haven’t acquired your type by Feb. 15, Grubhub recommends contacting the driving force care staff at [email protected] or at 866-834-3963.
Major tax type: 1099-NEC.
Who: Grubhub drivers who earned greater than $600 the earlier calendar yr.
How: Digital and paper type.
Lyft
Based on Lyft’s tax web site for drivers, the corporate companions with TurboTax to offer discounted self-employed tax-filing providers. All Lyft drivers obtain 25% off TurboTax Self-Employed and TurboTax Self-Employed Reside Federal submitting.
Platinum drivers obtain 50% off. To entry your tax paperwork on-line (which can embrace the 1099-Okay in addition to the 1099-NET), log in to your driver dashboard and click on the “Tax Info” tab. There, you’ll have the ability to view your 1099-NEC, 1099-Okay and an unofficial tax abstract doc compiled by Lyft. The tax abstract shows your web earnings and is very helpful if you happen to don’t meet the incomes threshold for both 1099 type. All tax paperwork might be out there in your dashboard by January 31, 2022.
Major tax kinds: 1099-Okay and 1099-NET.
Who: Lyft drivers who earned greater than $600 the earlier calendar yr.
How: Digital and paper type.
Uber
Like Lyft, Uber companions with TurboTax to offer free self-employed tax-filing providers – plus a 50% low cost for stay chats with TurboTax’s CPAs.
You possibly can view your tax abstract on or after Jan. 31 (which can embrace the 1099-Okay in addition to the 1099-NET), by way of the tax info tab of your associate dashboard. You must have entry to Uber’s tax abstract even if you happen to haven’t met the revenue thresholds for both 1099 kinds. For extra info on tax paperwork supplied by Uber, go to their Tax Help web page.
Major tax kinds: 1099-NET and 1099-Okay.
Who: Uber drivers who earned greater than $600 the earlier calendar yr.
How: Digital and paper type.
Contributor Larissa Runkle makes a speciality of finance, actual property and life-style subjects. She is a daily contributor to The Penny Hoarder. Contributor Matt Mastasci contributed to this report.
