Tax Law Changes Impact “Gig Economy” Workers
The new tax law may create some headaches for “solopreneurs” working in the gig economy, tax expert Lisa London warns.
London, a certified public accountant working in North Carolina, said that the new tax laws could impact the deductibility of business expenses incurred by workers ranging from Uber drivers, multi-level marketing distributors, online sellers and various service providers.
London said the IRS may consider a business a “hobby” and therefore, the related deductions would be disallowed.
According to London:
“Before 2018, the side business’ expenses could be deducted up to the amount of sales made if the taxpayer itemized his deductions.
But no more. With the doubling of the standard deduction, the new law suspended the deductibility of Other Miscellaneous Deductions.
This means the income must be reported, but the related expenses are only deductible if the IRS would consider it a business and not a hobby.
London wants those in the gig economy to understand the steps they can take to be considered a for-profit business.
First and foremost, entrepreneurs must keep complete and accurate records that are separate from their personal finances.
Secondly, they must show intent to make a profit, which should include business and marketing plans. If their side business is also a fun activity, they’ll also need to document the less fun sides.”
Good advice. Find out more at accountantbesideyou.com.
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