Tax filing answers: Digital creators, freelancers, and gig workers
Overall, small business owners and those who are self-employed need to take a different approach to tax season. Gig workers, digital creators, and freelancers are no different, but there are some questions that can leave them stumped. Let's answer some of those frequently asked questions now.
I have multiple 1099s. What do I do with them?
It depends on which type of 1099 you have. Since you are most likely a gig worker, freelancer, or content creator reading this article, I’m going to assume you have multiple 1099-NECs. You will report each 1099-NEC as other income through Schedule 1. If this income is for your business (it does not need to be an LLC or any other entity, it just needs to be for a business) you will report this income on Schedule C.
How do I know if I need to report my 1099 on Schedule 1 or Schedule C?
If you are a freelancer, content creator, or gig worker and the income you are reporting is from a business, this information will go on Schedule C in your tax software. You don’t have to worry about Schedule 1. Your tax software will do the work necessary for this form for you. If you just used DoorDash every now and then, you are likely to just report this as “Other Income,” depending on your tax situation.
The accuracy of your tax return depends heavily on how well you managed your records throughout the year. Make sure you gather each 1099 you receive and report this information properly on your tax return. If the 1099s you receive are related to business income, each will have its own Schedule C. That's right, you may have multiple Schedule Cs if each 1099 is a distinct and separate job. If it is not, then you can combine income and report it on one Schedule C. Report the information exactly as shown.
I am a Twitch Creator and received a 1099 with royalties. What is this about?
Ah! Twitch does this thing where it reports royalties for your bits and subscriptions. You have to pay taxes on this. Royalties from Twitch Creators should go on Schedule C. Just as if you were reporting income from a 1099-NEC, you would report your royalties in the same manner.
I read that royalties go on Schedule E. Why would I put my royalties on Schedule C?
For Twitch, royalties are a different kind of royalties that are identified in the IRS code. For this reason, it is necessary to report your Twitch royalties on Schedule C instead of Schedule E.
How do I get my tax docs?
More than likely, you are looking for a 1099-NEC or 1099-MISC. If you made over $600, the company is obligated to send these documents to you. They may be sent through mail or email. Some companies also send you a link to an intermediary tax account. You should also be able to obtain these documents by logging into an intermediary tax account dashboard.
What is an intermediary tax account?
If you work for a company like DoorDash, you have an intermediary tax account. This account is through stripe and holds your tax documentation information. You should have been sent a link to set up this account and access these documents. If you have not, reach out to your gig company’s support team.
How do I file estimated taxes if I'm self-employed and am married?
If you are self-employed and file a joint return, you can submit estimated tax payments jointly or separately. There is a safe-harbor condition for safe harbor payments where if your income is below $150,000, you may make an exact payment of what you paid in income taxes from the previous year or 90% of the tax you estimate for the current year. Either is a great way to pay estimated taxes because even if you underpay, you avoid penalties and interest.
Ro’s Tax Tip: Each tax software is not created equal. Make sure you feel comfortable with the software you are using to file your taxes. Try out as many as possible. You typically do not have to pay until it is time to submit.
Still have questions? ComplYant is here to offer the free tools you need so that you’ll never miss a tax deadline. You’ll also find many great resources to help you manage your taxes without feeling overwhelmed. Free webinars like Tax Filing Tips & Tricks for Gig Workers, Freelancers, and Digital Creators can offer great tax strategies, and a readily available resource hub offers insight into tons of tax topics.