The tax bill is coming sooner or later! Are you prepared? Are you in the sharing economy? You probably noticed, more and more people get paid for tasks like Dog-Sitting or Dog-Walking.
So as a freelancer, are you aware of the coming tax bill and put some money aside? Almost 54 million Americans are in some way working in the sharing economy. This is more than one-third of the U.S. workforce.
And the difference to the traditional employees, independent contractors don’t have income taxes automatically withheld from their payday.
Those who earn income via the sharing economy, have to calculate about 30 percent of their profits to give back to the government.
How to minimize the tax burden?
Many of the first-timers get a unpleasant suprise when the tax season starts. So dont think there is an easy way to make money. Its wise to plan ahead to minimize the tax burden. The following tips will help you to be prepared.
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1. Do your research.
A simple Google search of “taxes, Uber” (or Airbnb, or TaskRabbit, or Etsy) will present you with at least a dozen articles, including common expenses you can deduct and what to do with the 1099-K form you may or may not receive.
Doing a little upfront research will put you a step ahead of most people who join the sharing economy, says Chris McDevitt, a tax professional and certified financial planner in Edmonds, Washington.
“Most people ignore taxes until after the first year,” McDevitt says. “It’s a big, big surprise.”
2. Think like a business owner.
You might not consider yourself a businesses owner – after all, you’re just doing odd jobs or watching puppies – but the IRS sees it otherwise. Thinking of your side gig as a company, rather than a hobby, will help you get in the mindset of tracking income and …………..
I found this very important and comprehensive article written by Tony Armstrong on: http://money.usnews.com/money/