INDIANAPOLIS – If you drive an Uber, deliver for DoorDash or maybe lost your job in the last year — where do you start when it comes to your taxes?
Tax season started Monday, so we wanted to find out specifically how gig workers or people who are unemployed should go about the next few months.
Let’s start with the gig economy.
It’s been around forever but according to reports, it’s estimated roughly 30 percent of the workforce participate in the gig economy. Taxes for those workers are more complex. Any income you get, whether it’s cash, Venmo, gift cards, it’s all considered taxable.
Another challenge can be that you’re typically self-employed. Bridget Stomberg, an associate professor of Accounting for the Kelley School of Business at Indiana University explained what you should know.
“They’re what we call independent contractors. They’re not employees. One benefit of being an employee is you get to split your employment tax liability 50/50 with your employer,” she added, “That’s not the case if you’re self-employed because in that case you’re really the employee and the employer. So you’re on the hook for 100 percent of your self-employment tax.”
Here’s some advice from Stomberg. Start early and keep all of your records. It can be pricey to seek help from a professional, so first, look for free resources. The IRS has a full page online dedicated to the gig economy.
Now what if you lost your job last year? That’s a reality for many people.
“First and foremost, and this isn’t tax advice, but check to see if you’re eligible for unemployment benefits,” said Stomberg.
During the pandemic not all unemployment benefits were subject to income tax. Now that provision is no longer in place.
“Now any dollar of unemployment benefits that you’re going to get are going to be considered taxable income,” Stomberg explained, “So again, just making sure you’re reporting that and that got that in mind so if you get $10,000 of unemployment benefits, you’re not going to be able to keep all of that in terms of take-home pay.”
Due to some of those disappearing benefits you may be expecting a smaller refund this year, or you may owe more. Stomberg says don’t let it be a surprise. Again, start your tax filing process early and stay calm.
Stomberg is a co-producer of a podcast that can also help you during this tax season. It’s called Taxes for the Masses. Her hope is to explain taxes so everyone can understand the process in an informative and fun way. It is available on all major podcast platforms.
April 18 is the tax filing deadline.
According to the IRS, most refunds should be issued in less than 21 days, if you file electronically.