COLORADO SPRINGS — Many people have turned to gig work and self employment to make money during the pandemic. In fact, there are millions of gig workers here in Colorado.
But if you're new to the field, it helps to understand the impact on your taxes.
According to the IRS, the self-employment tax rate for 2020 is 15.3 percent, on the first $137,700 of income. This is not the same as an income tax. You can *offset* your tax burden by claiming expenses. If you haven't been tracking them since you started gig work, experts recommend you try to reconstruct them.
"So, a lot of times you can go to bank records look at your credit card statements, if you have a glove box, full of receipts," explained Andy Phillips during an interview with Newsy. Phillips is the Director of the tax institute at H & R Block. "It's not a fun process, but you can reconstruct a lot of those expenses. Likewise with your mileage you may be able to reconstruct those, and if you're working for a platform, make sure you check and see what they might have tracked for you on your behalf," he said.
If you're a W-2 employee working from home, you're not eligible to deduct expenses that are not reimbursed by your employer, but gig workers can deduct home office expenses.
Two ways to get a faster tax refund are filing electronically, and making sure you're avoiding any mistakes on your taxes. You may be more likely to make mistakes if you're in a new tax situation, so this could be the year to get help from a professional.
