Tracking Income and Expenses for “Gig” Work – Did You Know?
With working from home becoming more common in 2020, many people are taking on freelance or “gig” work to supplement their incomes. Whether you rely on gig work as your primary income source or just log a few hours a week, it is important to track all your freelance income, along with any associated expenses. Freelance income must be reported to the IRS, but deductions for a home office and expenses like supplies and mileage may reduce your tax liability.
If you have multiple income sources, including an hourly or salaried job, you may need to adjust your withholding to account for your freelance work. The IRS offers a free Withholding Estimator tool to help you determine whether your current withholding is sufficient. If most or all of your work is on a freelance basis, you may need to make quarterly estimated tax payments.
A tax professional can help you develop an efficient system to record your income and expenses, and keep your withholding or estimated tax payments on track. It is much easier to track these numbers on an ongoing basis than to reconstruct them at the end of the year.
IRS Withholding Estimator: https://www.irs.gov/individuals/tax-withholding-estimator