Published on 08/03/2021
Americans have begun filing their 2020 income tax returns. After the pandemic, this is going to be a challenging tax season for most Americans. And the process of filing taxes can be profoundly difficult for gig economy workers.
Gig workers have to file their income taxes on Schedule C, unlike the W-2 employees. They report their income and then report offsets for business expenses. Gig workers have to track and keep a record of all these processes and expenses as well.
Gig workers are required to get a Form 1099 from the companies or people they work for. Unfortunately, most of the time, these workers do not know when to get these forms from the people they have worked for. Ignorance in these matters can also lead to grave consequences from the IRS.
The first thing that a gig worker should do when they get an assignment is getting the employer to fill the W-9. This form gets all the details and information about the worker to the employer. This will allow the employer to correctly report and clock the workers’ wages.
The employer will then issue a Form 1099-NEC by January 31 for the worker. This form is issued to gig workers for payments over $600 in a year.
What if there is no Form 1099?
The easiest thing to do is to reach out to your customer/client or employer and ask for one if you haven’t received the form yet.
However, workers should also think about their income. If it was less than $600 during that period, they will not be receiving a Form 1099 in all likelihood. Anyhow, they will still be required to report their income irrespective of the amount.
The life of gig workers is fairly independent. But with independence comes great responsibility. As a responsible citizen, the worker is required to report their income.
The report creates a record of your income in the social security system which will help you in the future claim several Federal benefits. Reporting all your income on time will also help you create and fund a retirement account for the future.
Hence, you should be reporting all your income for the year irrespective of the fact whether you got a Form 1099 or not. Additionally, moving forward, workers should be asked to complete the W-9 form to receive Form 1099-NEC in time. You can get in touch with us C19grants@mytaxfiler.com for more info on how to move further if you haven’t received your due Form 1099-NEC.