Today’s post comes from guest author Jon Rehm, from Rehm, Bennett & Moore.
The issue of whether Uber drivers and other so-called “Gig Economy” workers are employees or independent contractors is a hot topic among lawyers and policy makers. But last week independent contractors in the Gig Economy and beyond had a more mundane but no less serious dilemma:
Filing their taxes
Independent contractors are required to pay their full FICA and Medicare taxes. These higher taxes can be offset by more liberal deductions but that assumes a contractor has more expenses to deduct.
Deductions also require paperwork. Filing your taxes as an IRS Form 1099 independent contractor is more complicated than filing your taxes as an IRS W-2 employee.
Independent contractor status can be helpful for someone who wants to be an entrepreneur. But for those who just want to support themselves and family, involuntary independent contractor status can mean higher taxes, more paperwork and more risk of trouble with the IRS and state revenue agencies. Future tax days could be even more stressful if more workers are forced into independent contractor status in order to support themselves and families.