I landed my first job as an independent contractor at age 12, although, technically, I was a subcontractor. My older brother mowed lawns in our neighborhood, and whenever he could not do the work, I filled in.
It wasn’t easy. It was hot and humid in the summer, often reaching over 100 degrees Fahrenheit. We had a push mower, and since we were too young to drive, that meant pushing the mower to the property—sometimes a mile or so away—with the gas can strapped to the top before the work could even begin.
But I got paid for work on a schedule I picked. It was a heady feeling. And one I would remember when, later, I had the opportunity to do some freelance writing and speaking.
Chances are that you’ve had a side gig or freelance job at some point, too. A study by Upwork and Freelancers Union estimated that over a third of the US workforce—36%, or 57.3 million Americans—were freelancing in 2017.
Those numbers were slated to grow to most of the workforce by 2027, though the pandemic has altered many plans.
Freelance work remains appealing for many Americans with its combination of income and flexibility. If you’re a member of the growing gig economy, here’s what you need to know about taxes.
There is no “per job” reporting threshold
There’s a persistent rumor that you only have to report individual payments of $600 or more on your tax return. I suspect that’s related to the Form 1099-NEC (formerly Form 1099-MISC for non-employee compensation) reporting threshold. But you must report all income received from your freelance work on your tax return, even if you do not receive a corroborative form from the payer.
Keep great records
The IRS requires you to keep adequate proof of income and expenses. You want to be able to verify your income and your expenses. Some companies, like certain ride-sharing businesses, will track information for you and send you an informational form. But even if you don’t receive a form, you’ll need to report your income—and of course, offset that income with related expenses.
It’s easiest to do this contemporaneously rather than try to make sense of it all later. You can record your time worked, gigs played, and mileage driven in an old-school journal or digital app. If you have a deposit account and credit card for business that you maintain separately from your personal banking, it helps to keep records neat. And when it comes to costs, keep receipts and annotate the nature of the expense—you can write a description on the receipt and save or scan it …….