What do tax overhaul proposals mean for ‘gig economy’ workers?
There is no shortage of analysis related to taxes right now. The president has offered a peak at what he would like to see and the Republican-controlled House is hashing its way through a long list of proposals, adding here and taking away there.
No one can predict what the final tax overhaul bill will look like. One thing that nearly every observer seems to agree upon, though, is that this overhaul needs to specifically address the development and anticipated growth of the so-called “gig economy.” Regular readers will recall that we’ve talked about this on a number of occasions, most recently in September.
The experts point to a couple of reasons why this is so important. One is that many individuals working in the smartphone-driven service market are failing to report income to the tune of about $215 billion a year. Another is that so many of those who work in the sector are unfamiliar with what their obligations are regarding filing their tax returns, which can lead to confrontations with the IRS. Most of them grew up working for hourly pay and receiving W-2 forms at tax time. Now they might be working with 1099 forms and wondering whether they’re employees or independent contractors.
What all this means, unfortunately, is that there is no simple answer to the question posed in the title of this post. Observations come from all corners. In one recent column on CNBC.com, writer Jake Novak suggested that the overhaul plan should boost the standard deduction. He says that’s because itemizing deductions is so complicated that the growing population of independent contractors are likely not to even try to file for them.
Meanwhile, a Republican proposal called The NEW GIG Act of 2017 is before the Senate. Supporters say it would clear up confusion for the IRS over whether gig economy workers should be classified as employees or independent contractors – making it easier for the agency to collect taxes.
Some legal analysts say the measure would be welcome news to employers while doing little to reduce confusion for taxpayers.
For now, the best advice would seem to be, remain vigilant.