19 Jan 2021
02 Dec, 2020
BY Allie Hagerty
Congratulations to all of the gig economy workers out there! You’ve been managing your own schedule and working hard as an independent worker all year. As 2020 comes to an end, you should start preparing to file your independent worker tax return. All gig economy workers are responsible for reporting their income to the IRS. Whether you’re a new contractor or you’re a seasoned jack of all trades, this information will be helpful to you.
The 1099-MISC form is one of the most important pieces of information you’ll need to file your independent worker tax return. The amount of money you earned with a company dictates if you receive this form. We highly recommend you gather your own records and data to ensure you have everything you need to file your independent worker tax return.
Ensure your personal information is correct with every business you worked with this year. Verify your information is correct with every freelancing platform, client or staffing agency you use.
This information includes:
Your Full Legal Name
– Verify that your legal first and last name match how they are recorded on your government-issued ID.
– Include any hyphens between your last name(s), if applicable.
– Use your full first name, rather than a nickname or alternative spelling.
Your Current Contact Information
– Confirm that your physical mailing address is correct. Include any unit or apartment numbers, if necessary. Ensure your zip code is accurate.
– Double check that the email address you have on file is one that is active. It’s good practice to review what account is being sent important tax information.
We advise checking this information quarterly, to keep it updated and protect against out-of-date information. If you are having trouble updating your information, contact the company or business right away. If you address this issue before the end of the year you can avoid delays in receiving your tax forms.
Businesses each have their own ways to maintain internal records when they use independent workers and contractors. We recommend that you do the same thing. Keep track of the jobs you’ve completed, the hours you worked and your earnings. Store this information in a document or folder for easy access when filing your independent worker tax return. Be sure to be organized and capture as much information as possible, especially:
– The organization(s) you worked for (and who your contact was at that company)
– All dates and hours worked
– How much you earned
Organizations only need to provide a 1099-MISC form if you earned at least $600 this year for that individual company. Keeping your own records ensures you have all of the information you need. This is crucial if you earned less than $600 with a company and will not be receiving a 1099-MISC from them. As an independent contractor, you are still responsible for reporting that income.
For example, if you earn $400 with Jobble and $250 with Uber in 2020, neither company would send you a 1099-MISC. However, you are still responsible for providing the IRS with your independent income from both of these companies.
Keeping your own records throughout the year is easier than trying to gather information at the end of the year. If you didn’t keep track of your jobs and earnings, start working on gathering that information now.
We recommend checking your freelance platform or client company’s websites for posted information about 1099-MISC forms. Some may have expected timelines posted. Others may have deadlines for independent workers to update their personal or contact information.
1099-MISC forms are due to the recipient (you) by January 31st. Again, you will only receive a 1099-MISC if you earned over $600 with that individual company or platform. If you have not received your form by January 31st, reach out to the company that contracted you for help. By taking the time to review your personal and contact information ahead of time, you may avoid delays.
For more information on 1099-MISC forms and your responsibilities with an independent worker tax return, we recommend that you contact a tax professional in your state.