The gig economy has revolutionized how millions of people earn income, offering opportunities to meet financial goals, run small businesses, or juggle multiple side gigs. However, navigating the tax implications of gig income is vital, requiring specific forms to report self-employment income.
One common form used in the gig economy is the Form 1099-NEC, provided by companies if you receive payments exceeding $600 from a side job. Another form, the Form 1099-K, is received if you have sales over $5,000 through third-party processors like PayPal.
Recent changes in reporting requirements, influenced by the American Rescue Plan, impact how payment processors report transactions, emphasizing the need for accurate reporting of self-employment income. It’s crucial to report all earnings, even if below the $600 threshold, to comply with IRS regulations.
When reporting income from multiple side gigs, TurboTax Premium simplifies the process, guiding users through reporting income and deductible expenses. Expenses play a critical role in offsetting self-employment income, with deductions like home office expenses, supplies, and travel crucial for lowering taxable income.
For self-employed individuals, understanding self-employment tax is essential. This tax requires contributors to pay the entire 15.3% Social Security and Medicare taxes, with a portion deductible to lower taxable income. TurboTax Premium automates the calculation of self-employment tax, ensuring accurate reporting.
Whether you are a full-time entrepreneur or have a part-time side gig, TurboTax provides comprehensive support for filing taxes efficiently. With TurboTax, you can rest assured that your tax moves from the past year will be maximized, offering the best chance at a substantial refund.
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