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Got Gigs? Get Smart About Your 1099-MISC Tax Form

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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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