Got Gigs? Get Smart About Your 1099-MISC

If you’re among the 75 million gig workers in the U.S. you will receive, if you haven’t already, something called a 1099-MISC. It’s one of the many 1099 statements that you might receive. But this one captures what is called non-employee compensation.

And you have to report that compensation in Part I of something called Schedule C (Form 1040). Uncle Sam says you would use Schedule C to report income or loss from a business you operated or a profession you practiced as a sole proprietor. An activity qualifies as a business if:

Your primary purpose for engaging in the activity is for income or profit.
You are involved in the activity with continuity and regularity.

The good news? You also get to deduct in Part II certain business expenses against your Schedule C income, including car expenses, office expenses, legal and professional services, supplies, travel, meals and the like.

What else do you need to know about being a gig worker and taxes?

You will use Schedule SE (Form 1040) to figure the tax due on net earnings from self-employment.

And, you may have to make quarterly estimated tax payments to avoid tax underpayment fines.

For his part, Mark Luscombe, a principal analyst with Wolters Kluwer Tax & Accounting, said the most important issue with respect to Form 1099-MISC is that there is a new Form 1099-NEC that is to be used for reporting the information that used to be reported on Form 1099-MISC boxes 7 and 9.

“This change was made due to confusion resulting from a tax law change that had different due dates for different information reported on Form 1099-MISC,” he says. “With the change, non-employee compensation and direct sales of $5,000 or more of customer products to a buyer will be reported on Form 1099-NEC rather than Form 1099-MISC.”

Want to know more on 1099? Listen to the podcast with Susan Allen, senior manager at AICPA Tax Division.

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