When times are tough, the entrepreneurial spirit shines. And that’s exactly what happened in 2020.
Tons of people joined the gig economy and officially became self-employed, in valiant efforts to feed their families.
But if you’re new to this self-employed world, there are some things you need to be aware of, come tax time.
- 1099-MISC – Miscellaneous Income – You still may get a 1099-MISC if you earn more than $600 in freelance work or contract labor during the year.
- 1099-NEC Nonemployee Compensation – Going forward, this is the form you will get going forward to report independent contractor income, again if you made $600 or more. Big note: Even if you made less than that, you still have to report the income you earned on your tax return.
- 1099-K -- Payment Card and Third Party Network Transactions – This form is used to report certain payment transactions paid by a third-party provider. For instance, if you have an Etsy (Ticker) site and you collect payments for your sales, Form 1099-K will tally them. (Check out this Turbo Tax piece for more on the form.)
- Schedule C – Profit or Loss from Business – This basically is your self-employed balance sheet. You report your income here and then get to deduct a bunch of expenses like marketing, advertising, mileage for driving, and of course your home office. Check out this IRS piece to see if you qualify for the home office deduction. If you do, deduct a portion of the utilities, rent, mortgage interest, property taxes, etc. that are proportional to space.
TurboTax will help you through the entire tax season. So far, Greene-Lewis has tackled a number of tips from advice for gig workers, parents, crypto investors, and more. Plus, watch her videos discussing last-minute, and most overlooked deductions and credits.
Big note – if you worked from home because you were allowed in your actual office, you do NOT qualify for the home office deduction.