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Gig economy faces uncertain impact from new tax reporting standards
Previously, most gig workers making less than $20,000 a year did not need to report taxes (Photo: Pexels) No one likes paying taxes, but filing taxes is especially bothersome for gig workers. As independent contractors, they are required to keep track of their own incomes and make quarterly estimated payments, unlike most employees, and they pay double the tax rate employees pay for Social Security and Medicare because the companies they drive for don’t match their contributions .
So far, that hasn’t stopped 16% of Americans –– that’s nearly 53 million people –– who earned money on gig platforms in 2021 because only gig workers making $20,000 or more per year were subject to reporting taxes themselves. But a shakeup is on the horizon.
Buried in the stimulus bill signed by President Joe Biden in March is an amendment to the tax code that will place even more of the tax reporting burden on gig workers, and that could spell trouble for third-party delivery services that rely on independent contractors to cover the last mile.
The new tax reporting standards, which take effect next month, will lower the tax reporting threshold on income from electronic payments from $20,000 to $600. Since gig […]