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Millennial Money: 3 things to know if you’re new to gig work

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Shutdowns, layoffs and salary cuts brought on by the coronavirus pandemic have left millions of Americans searching for new sources of income. Those who’ve recently turned to gig work may be weeks away from a financial surprise in the form of unexpected tax bills and insurance coverage fine print.

“These are the two key items that most new business owners overlook,” says Chris Russell, a San Diego-based certified financial planner who specializes in business owners and the self-employed.

Don’t consider yourself a small-business owner? Well, let’s start there.

TO THE IRS, YOU ARE A SMALL BUSINESS

Sure, you’re just running food deliveries. But that simple act makes you a small business in the eyes of the IRS. And that opinion is the only one that counts when it comes to taxes.

“Basically, you’re considered an independent contractor,” says Garrett Watson, a senior policy analyst with the Tax Foundation, a nonprofit organization. “You don’t need to do anything super complicated. You don’t need to incorporate or do anything like that.”

But you do need to pay taxes on any money you earn through gig work. This fact is often an unwelcome, and expensive, surprise for new gig workers. As an employee, income and payroll taxes are automatically withheld from your paycheck. That’s not the case for gig workers, Russell says.

“No taxes are deducted from the money you make as a business owner,” Russell says. “Meaning that you will likely owe a lot of money to the IRS when you file your returns.”

A good rule of thumb: For every dollar you earn doing gig work, save 30% to put toward income and self-employment taxes. Going forward, plan to estimate and pay those taxes quarterly to avoid a penalty from the IRS.

And if you’re thinking “I didn’t earn much. I won’t report it. How will the IRS know?” Don’t. It’ll know.

EXPENSE TRACKING IS YOUR BEST FRIEND

Gig work isn’t all money in the bank. You are incurring expenses, too. Keep track of those as you can likely deduct some of them and lower that tax bill we talked about a second ago.

“Keep good and honest records to take advantage of all deductions that you’re entitled to,” says Ryan Greiser, a certified financial planner in Doylestown, Pennsylvania.

Apps like Stride, Hurdlr and MileIQ automatically track your mileage and expenses, for free or a nominal fee, to help you calculate taxes. Depending on your situation, Greiser says QuickBooks might be worth exploring.

“It is a small investment to track expenses, estimate your quarterly taxes, track your mileage and pay your quarterly taxes online,” Greiser says.

You also want to investigate the nuances of what can and cannot be deducted depending on your slice of gig work, Watson says, pointing to ride-hailing services as an example.

Say you drop a passenger off and drive across town to find your next ride, he says. Can you deduct the cost of gas used in between rides? (You can.)The IRS Gig Economy Tax Center is a good place to find answers to your questions.

INSURANCE CAN BE COMPLICATED

The IRS isn’t the only agency that needs to know about your new income stream. Your insurance agent needs to be clued in, too. Not disclosing your work could get you dropped from your policy in some cases. And, beyond that, your insurance agent can help you understand what aspects of your gig work are covered.

Transporting food or people? You need to know if your personal car insurance policy covers incidents while you’re on the job (It likely won’t.). Rideshare or commercial auto insurance could fill in the gaps.

While the platform you work on might cover you with a commercial policy, it only kicks in under specific circumstances. It’s important to know the details of that coverage.

Uber and Lyft provide commercial coverage for drivers, but it applies only if you have passengers in the car or are on the way to pick up a passenger after accepting a ride. DoorDash provides liability coverage only and just when food is in your car. Grubhub and Instacart don’t provide any commercial coverage for delivery drivers on their platforms.

___________________________________

This column was provided to The Associated Press by the personal finance website NerdWallet. Kelsey Sheehy is a writer at NerdWallet. Email: ksheehy@nerdwallet.com. Twitter: @kelseylsheehy.

RELATED LINKS:

NerdWallet: Self-employment tax: Understand and calculate it in 2020 http://bit.ly/nerdwallet-self-employment

IRS Gig Economy Tax Center https://www.irs.gov/businesses/gig-economy-tax-center

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Fri 9 AM | Exchange Exemplar: Gig Work, Heaven Or Hell? – Jefferson Public Radio

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GIG inks wind offtake with Danone in Poland – reNews

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Macquarie’s Green Investment Group (GIG) has signed an agreement with Danone companies in Poland to supply renewable energy through a 10-year power purchase agreement (PPA).

The power will be provided by GIG’s Jozwin wind farm, which was acquired by the business last year.

Route-to-market and balancing services will be provided by Axpo Polska, with Axpo also acting as the intermediary with food giant Danone, which will use Axpo as their licenced electricity provider.

This PPA will support Danone’s current decarbonisation goals as its Polish operations make up 6% of the business’ total energy usage around the world.

Danone is part of RE100, a collection of the companies that have committed to using 100% renewable electricity.

Danone’s commitment is to reach 100% of renewable electricity by 2030. 

At the end of 2020, Danone exceeded its previous target of 50% by 2020, getting 54.3% of its electricity from renewable sources.

GIG Europe head Edward Northam said: “This agreement shows our ability to work in partnership with our customers, in this case Danone, to develop bespoke solutions under challenging market conditions.

“Having understood Danone’s specific needs, GIG in partnership with Axpo, has created and delivered a solution that meets Danone’s energy and carbon reduction ambitions in a cost-effective manner.”

GIG has now supported 18 corporates with PPAs, equating to 3GW of renewables capacity.

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Gig economy workers demand fair conditions | Guardian News

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James Yang is still angry over the road deaths of five colleagues at work who suffered the same pressure he felt as a food delivery driver.

The Chinese migrant worked for Hungry Panda but says the company booted him off the app after raising concerns about conditions.

Mr Yang earned as little as $12.50 an hour working 12-hour days.

He and fellow gig economy workers met with politicians at federal parliament on Thursday, campaigning for the same rights afforded to other workers.

Labor leader Anthony Albanese believes gig workers should be given the minimum wage and greater scope to access other base employment standards.

He urged the Morrison government to stand up to Uber and Hungry Panda in the same way it took on tech giants over the news media bargaining code.

“What we can’t have is a circumstance whereby we have two industrial relations systems,” Mr Albanese said.

“One that has pay, one that has annual leave, sick leave, one that has conditions that most Australians take for granted, and another whole section of society who are marginalised, who don’t enjoy any minimum wage.”

Industrial Relations Minister Christian Porter said he had a great deal of sympathy for Mr Yang but he’s not going to tell him there’s an easy fix.

He said the Fair Work Commission had consistently ruled gig workers were contractors and not subject to the same conditions as employees.

Mr Porter said media code negotiations with Facebook and Google were years in the making after a consumer watchdog inquiry.

He noted the cost to business of changing the gig model and impact on consumer pricing as key complexities in regulating the sector.

Rideshare driver Malcolm McKenzie said gig workers didn’t have the same avenues to pursue unfair dismissal.

“Drivers face the possibility of termination through the app as a result of a fallacious claim against them, unsubstantiated claim against them,” he said.

Delivery driver Ashley Moreland said he faced losing his job if orders weren’t met on the company’s timeline.

“It really is time that laws caught up to the technology and that we brought some rights to this industry,” he said.

“Because I think it’s a bit of a shame that in a modern developed democracy, we have this situation of third world work.”

Australian Associated Press



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