When tax time rolled around on April 15 the world was in the thick of the COVID-19 pandemic. In the midst of lockdown orders and people terrified to pick up food or groceries for fear of contracting the virus, gig workers became national heroes as they kept people huddled in their homes fed with take-out and kept them supplied with groceries for their families.
Also that month, the IRS made a shocking announcement — they extended the due date for tax filing in the United States to July 15. After much speculation and cries from the unemployed masses to extend this deadline to September, many thought that that date would be extended, but that didn’t happen. They’re due.
Gig workers, on July 15 the government is expecting two quarterly tax payments for 2020 and your 2019 tax liability to be paid in full. Are you ready?
As all gig workers know, quarterly taxes must be paid to avoid penalties and late fees. The good news? The April 15 and June 15 quarterly tax payment deadlines were also extended to July 15 and no late fees will be assessed until after the July 15 deadline.
The bad news? If you’ve been unable to make these quarterly payments during the pandemic, both quarters are due along with your full tax liability for 2019 on July 15.
The penalty for failure to file is 5% of the unpaid tax you owe, assessed for each month or part of a month you’re late, up to five months or 25 percent. Source: CNBC
For those of you who’ve been burning it seven days a week, waiting for hours for your delivery food pickup or fighting other grocery shoppers for hand sanitizer and Lysol for your customers — although you do have to pay your tax liability on July 15, you can file all of the formal documents by October 15 by filing for an extension.
This should come as some relief, especially for those who work on multiple apps and may have put the bookkeeping aspect of your gig work on hold during the last few months. You still have time to figure out your mileage, car repair costs, and personal protective gear expenses, among others, by October 15. But, you need to have an accurate accounting of your total income for 2019 and that includes cash earned per IRS guidelines, this is based on the honor system.
Many veteran gig workers have a portion of their earnings held back for quarterly taxes if they are working on platforms that provide this feature. When it comes to something as important as taxes and the IRS, the old adage, ‘out of sight, out of mind’ does not bode well.
Gig workers who use their platforms to reserve quarterly tax payments, or do it on their own, sometimes find that they have saved more than they needed and get a welcome bonus.
The IRS now has a Gig Economy Tax Center which provides filing deadlines, tax forms — including Schedule C which itemizes expenses — and a link to pay your tax liability online, among other official links.
Whatever you do — FILE!
If you don’t have the money to pay for your tax amount due, never miss the filing deadline. There is an up to 25 percent penalty for failure to file if you are more than five months late. This can add up to big bucks for gig economy workers with wildly fluctuating income streams. Source: H&R Block.
Tax rules change every year — check out the IRS’ 2019 Travel, Gift and Car Expenses tax guidelines to ensure you are taking all available deductions and not writing off any unallowable car expenses.
On-demand and gig economy apps like Stoovo automatically set aside a portion of your earnings for taxes so you won’t come up short when the taxman comes calling.
Stoovo’s platform finds the best-paying jobs at the best time and in the best locations for you. Additionally, we help reduce the time spent looking for gigs, and by finding the best paying gigs, we manage the income volatility so prevalent amongst gig workers. Don’t go broke, go Stoovo.