Tax Prep And Planning For Gig Workers

One of the upcoming types of businesses is becoming a gig worker. Gig working can range from drive-sharing gigs to personal assistant gigs. The key with these jobs is that you are usually a contract worker and you are in charge of your own taxes. Also, gig workers tend to work for more than one company. This means you could have two or more incomes to keep up with for your tax preparation and tax planning. If you are new to this kind of work and to planning your taxes for the upcoming season, here's what you need to know. 

Savings Account for Taxes

When you hear that you have to pay your own taxes, you may not think much about it at the time. The truth is that many gig workers tend to think of the taxes they owe when it is too late to start saving for them. This is a hard lesson to learn. You can avoid this issue by doing two simple things as part of your tax prep. The first is to open a savings account that is strictly for tax payments and funds. Now, figure out how much you will need to pay in taxes for the income you anticipate having. For example, if your goal is to make $2000 a month, find out how much you will need to remove from that amount for taxes. When it is time to pay taxes, you will have the funds in your account and whatever is left can act as your refund. 

Keep All Receipts

When you are working as a gig worker, you will have certain expenses. Remember, the company does not cover your health benefits or your gas. They also cover supplies, computer upgrades, printer ink, or other needs. This means you will have to pay out of pocket. Make sure to keep your spending related to gig work separate, even if that means doing two separate checkouts. This will give you a receipt that is just for the gig work expense. Save that receipt using a method that works for you. You will need these to show what you spent, how much you can write off on your taxes, and to answer any freelancer-related questions during your tax appointment or paperwork. 

If you are confused by any of the tax prepping and planning for the upcoming tax year, contact your area tax preparer. They can help you with the right paperwork you need and anything you need to know about the process. They can also help you determine if there are any apps that may help you keep track of your tax information for upcoming years.

For more information on tax preparation, contact a professional near you.