Are you prepared for the end of the year and putting together your taxes? It’s a busy time between the holidays, buttoning up the end of the year, and getting ready for the new year.
Let’s run through a tax preparation checklist for gig workers and independent contractors.1
Item No. 1 – Collect your 1099s
Gig workers and independent contractors generally receive 1099 forms, which differ from traditional W-2’s received for wage payments. Be on the lookout for 1099 forms from your gigs, or see if you can access them online. You will need your 1099s to complete your year-end taxes.
The indi team also covered the difference between a 1099 worker and a W-2 employee in a previous blog post you can find here!
Item No. 2 – Perform an Expense Audit
Where was your money going in 2022? And to prepare for the next tax payment period, where do you anticipate your money will go in 2023? Recap last year’s fixed and variable business expenses. As you go down your list, ask yourself two very important questions about your expenses:
- Have I been tracking all of my expenses?
- Do I expect similar expenses in 2023?
Item No. 3 – Perform a Deduction Audit
So, you’ve figured out what you’ve spent as you wrap up the year. Now ask yourself if you are getting the right amount of tax deductions. Gig workers may be eligible for some specific deductions because they file taxes as self-employed individuals. A few of the most commonly used tax deductions for self-employed people are:
- Self-Employed Tax Deduction
- Home Office Deduction
- Internet and Phone Bills Deduction
- Health Insurance Premiums Deduction
- Vehicle Use Deduction
If you have questions along the way, always rely on reliable information sources such as the IRS.gov Gig Economy Tax Center, the TaxSlayer Blog, or the guidance of a tax professional.
1. Please note that the above is provided on an informational basis and is not a substitute for individual tax planning or for legal, financial, or tax advice.