The Gig Economy
Steve Perry- The gig economy includes services like Uber, Lyft, and Airbnb, with about one-third of Americans involved. - Participants are self-employed and must pay taxes, reporting all income including cash, goods, services, and tips. - Unreported income can lead to doubled IRS statute of limitations if discrepancies exceed 25%. - Banks must report deposits over $10,000 to the IRS; credit card transactions are also reported annually. - Business expenses that are "ordinary and necessary" can be deducted to reduce taxable income, best managed with an experienced accountant. - To avoid estimated tax penalties, gig workers should make quarterly payments covering at least 90% of the current year's or 100% of the prior year's tax liability. - Accurate and daily record keeping of income and expenses is critical for tax planning, estimated payments, and year-end tax preparation. - Professional advisors can assist with setting up accounting systems and maintaining compliance. - Though the gig economy differs from traditional businesses, fundamental tax principles still apply; establishing procedures and hiring experts enables success while focusing on core activities.
