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What do driving for a ride-sharing company, renting out a room through a rental service and working for a company that outsources errands and tasks have in common? These are all income-generating activities in the gig economy on which income tax will be owed. A recent survey from Fiverr found that 73% of Americans plan to do freelance work this year in some capacity. If you are one of them it’s important to be aware of your tax obligations As a gig economy worker, it’s your responsibility to keep track of the money you make and report it on your tax return. Sounds simple enough, doesn’t it? However, it can get complex since you may have received income from various sources and through various payment apps such as Venmo or PayPal. These payments can be difficult to track unless you make a concerted effort and failure to do so can result in penalties and late payment fees unless you are aware of your tax obligations. The following summary will help you understand your freelance tax obligations and how to file your freelance taxes. Income you receive from a gig economy activity is generally taxable even if you don’t receive a Form 1099-MISC, Form 1099-K, W-2 or other income statement. On the other hand, your business expenses may be deductible, depending on tax limits and rules. All income you earn needs to be reported. This includes part-time, temporary, or side work paid in the form of cash, property, goods, or virtual currency. You may also be required to make quarterly estimated income tax payments and pay self-employment tax. When working in the gig economy, it is imperative that your taxes are correctly classified. It is also critical that business owners correctly determine whether the individuals providing services are employees or independent contractors. You can use the worker classification page on IRS.gov to determine how they should be classified. As an independent contractor, you may be able to deduct business expenses, depending on tax limits and rules. It is important to keep records of all business expenses in case they qualify for a deduction. Gig workers, like independent contractors should also pay taxes throughout the year so they can avoid owing money when they file. Typically, an employer will withhold income taxes from their employees' pay to help cover income taxes their employees owe. Gig economy workers, who are not considered employees, but who may still have a “regular” 9 to 5 job, need to consider two ways to cover their income tax obligations:
via Freelancers Union Blog https://blog.freelancersunion.org/2023/04/10/are-you-a-new-freelancer-heres-what-you-need-to-know-about-filing-your-taxes/
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Creating an impactful brand boils down to aligning a lot of self-reflection with 6 key elements of your brand messaging strategy. Because when you invest your time, energy, and intention into your brand messaging strategy, something special happens. You start looking at your business and your purpose with fresh perspective. You show up in a way that’s consistent and clear. And you’re able to step into your brand message with confidence, no matter the context. Brand Messaging BasicsFirst and foremost: what is brand messaging? It’s the recognizable way your brand shows up in the world. Your brand messaging fills in the details of all the big-picture blanks, like what you do and why it matters, what you stand for, and how you’re going to stand out. And this foundational strategy guides all your visual branding, content creation, customer experience, the works. No matter what area of your business you’re focusing on, how you show up in the world depends on the who, how, why, and what of your brand. Brand messaging strategy answers these questions and allows you to share your message and mission with ease. Brand Messaging ElementsSo, what are the moving parts that go into an impactful brand messaging strategy? One that connects on a human level? One that allows you to run a business that not only feels good, but also does good? There are six basic elements that I include in each brand messaging guide I co-create with my clients:
Brand StatementYour brand statement is essentially your elevator pitch, positioning statement, or unique selling proposition. It sums up what you do, who you do it for, why, and ideally, what makes you different. This can be used in your social media bios, on your boilerplate for press releases or event registration pages, when you introduce yourself in person, and beyond. Mission StatementAnother essential brand messaging basic is your mission statement. This is a guiding force for internal and external decisions, as well as the basis for all communications. It’s your why. Think about the impact you want to make. Imagine the transformation you can facilitate. Articulate the reason your business exists. That’s what you want to include in a mission statement. Brand ValuesIf you’ve been around my corner of the internet for any length of time, you know how important brand values are to my approach to business. By standing for your brand values, you’ll stand out in all the right ways. You’ll also attract all the right people and repel all the wrong ones. You first need to establish the 3-5 core values that matter most to you AND your audience. Then you need to define what they specifically mean to your brand. And most importantly, you need to actively apply your brand values to every area of your business. Living out your brand values means that you’ll become known for something people can see and feel. It’ll draw your audience, team, and partners closer to your mission. And it’ll push your business toward your impact goals. Brand VoiceYour brand voice should be consistent across all your outreach and interactions. It’s your recognizable way of communicating that carries through everything, from marketing to customer experience to partnerships. So even when your tone changes—like when owning up to a mistake vs sharing a big win—the voice stays the same. Target AudienceYour target audience are the people you dream of serving best-case-scenario. Create a detailed customer persona in order to speak directly to this *one specific* type of person who represents an entire audience. Be sure to include both demographic and psychographic factors. As you niche down your audience, you’ll attract who you’re looking for and repel people who aren’t the right fit. The upside: when you aim for a target audience, you’ll still resonate with additional people outside of that “ideal persona.” But you’ll reach them without wasting the energy of actively seeking out these outliers, or spreading your message too thin. Once you feel confident and clear about your core audience, you might create multiple personas. This would allow you to tailor different campaigns and offers to different segments. Regardless, thinking as your ideal customer persona avoids the pitfall of making decisions based on your own personal biases and centers your decisions on what your audience needs and wants from you. Core MessagesYour core messages are key soundbites that can be recycled, combined, broken down, and adapted infinitely. Think: sales calls, website copy updates, outreach letters/emails, media pitches, networking conversations, video scripts, social media posts, and marketing collateral. Generally, I divide these core messages into three basic buckets: About The Founder, About The Brand, and About The Offerings. There’s some overlap between each category because they all tie back to your mission, values, and audience. But it’s helpful to approach these topics from many different angles. Aim to strike a particular chord that resonates with your target audience. Then use that message as a fresh jumping off point to go even deeper and broader. Creating A Values-Aligned Brand Messaging StrategyFrom the bite-sized “marketing speak” messages to your overarching mission, piece together these six elements into a complete values-aligned brand messaging strategy. You can leverage this strategy yourself so that you’re more confident and consistent in talking about your own brand. And you can hand over your brand messaging strategy to your social media manager, blog writer, copywriter, VA, customer success team, referral partners—whoever needs to understand the vision you’ve created. And your future self will thank you for all this upfront reflection. Refer back to your brand messaging guide when making ANY decision. If it’s aligned with your mission, values, and audience, you have the green light. If not, it’s an easy no. No matter what you choose to stand for, your unique “why” and “how” set you apart. Your brand messaging strategy reinforces what makes you memorable and connects you to the exact people you want to reach. Taking Confident, Meaningful ActionDownload “A Visionary’s Guide To Elevator Pitches” to talk to real people about what you do and why it matters. And if you’re ready for outside perspective and a co-created brand messaging strategy guide that will allow you to get visible with confidence, consistency, and clarity, the Messages That Matter VIP Day is for you. via Freelancers Union Blog https://blog.freelancersunion.org/2023/04/06/elements-of-an-impactful-brand/
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Figuring out how stress affects your body can be a challenge, because the answer can depend on how stressed out you are, and for how long. For instance, recent research has shown that low-to-moderate stress levels may actually be good for your ability to learn and apply knowledge. High stress levels, on the other hand, can negatively impact your working memory. Likewise, short-term stress can impact your body differently than long-term stress. So, how does stress affect the body when it’s momentary versus chronic? Here, experts break down the most common physical, mental and emotional outcomes for both, and offer some tips on how to manage stress to help prevent long-term health issues. Short-term stress effects on the body Cleveland Clinic psychologist Dr. Susan Albers-Bowling noted that daily stressors such as forgetting to pay a bill or missing the bus to work tend to cause short-term, low-to-moderate stress on the body. “What happens in the body is that our muscles begin to tense, our heart begins to beat faster and more oxygen goes to our lungs, this is to help prepare for the stressor,” she said in a Cleveland Clinic article. “The good news is that often, stressors are minor. After the stressor passes, our body goes back to its normal resting state.” Dr. Suchita Shah, a University of Oxford undergraduate primary care tutor and examiner, explained in an article that short-term stress may also be “acute” if the stressor involves an unexpected crisis, such as a car accident. For these situations, your stress response usually lasts about two to three days. In addition to experiencing the same physical symptoms that you would with short-term, low-to-moderate stress, the health impacts of short-term intense stress may include:
Long-term stress effects on the body “Chronic stressors are things like financial issues and conflicts with family members,” said Albers-Bowling. She noted that with long-term stress, “your body gets stuck in overdrive in that fight-or-flight response, and it can’t settle back down. So, your body becomes flooded with cortisol continuously. This causes inflammation, and it’s the inflammation that makes you vulnerable to chronic disease.” According to Yale Medicine, long-term stress may increase your risk of developing:
Harvard Health notes that chronic stress can also elevate your risk for developing several different types of dementia, including Alzheimer’s disease. It does this in part by lowering activity levels in brain regions that handle high-level thinking tasks. Managing overall stress Keeping your stress in check helps ensure it doesn’t become a long-term issue that impacts your health. The good news is that there are several proven methods to help you manage your stress. Take a dip in nature Research reveals that parks, rivers and lakes can make great stress relievers. In fact, the Yale School of Environment notes that several studies have revealed nature’s ability to lower stress levels and boost psychological health. One of these studies included nearly 20,000 participants, and it showed that 120 minutes a week in nature (but no less) elevated people’s sense of good health and well-being. “Two hours a week is hopefully a realistic target for many people, especially given that it can be spread over an entire week to get the benefit,” lead study author Mathew White said after the study was published. Eat the right foods Eating a “rainbow of fruits and vegetables,” reducing sugar intake and avoiding alcohol are great ways to reduce your stress, according to the American Psychological Association (APA). Take time to rest and unwind “After experiencing times of great change, high demand or significant loss, it’s essential to press pause and rest. Often creating time and space for rest means saying ‘no’ to invitations and requests for help, at least temporarily,” Johns Hopkin stress management expert Frances Callahan said in recent a blog. Log off social (and traditional) media Like with sugar and alcohol, the APA recommends a “dietary restriction” of media. This can help reduce the psychological impact of processing so many stories, which can trigger the stress response. Know when to ask for help “If you’re having trouble getting to work, or you have changes in your sleep patterns or your appetite, these are some indications that your stress level may be out of control,” Albers-Bowling explained. Your doctor can work with you on a stress-reduction plan that may include medication, stress-management techniques and counseling. Callahan noted that “experiencing stress is inevitable, but managed well, stress can promote emotional and intellectual growth and resilience as we age.” via Freelancers Union Blog https://blog.freelancersunion.org/2023/04/06/how-does-stress-affect-the-body/
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With this year's April 18 tax deadline just around the corner, the Internal Revenue Service is offering these tips to taxpayers who received an incorrect Form 1099-K or received one of these forms in error. The IRS also explains how to report these transactions on their tax return. What is a 1099-KForm 1099-K, Payment Card and Third Party Network Transactions, is an IRS form that is used to report certain payment transactions. Taxpayers use information reported on this form, along with their other tax records, to determine their correct tax liability. All income must be reported, unless it's excluded by law. This is true, whether or not they receive a Form 1099-K. The 1099-K reports various business transactions, including income from:
They will typically receive this form annually by Jan. 31 for transactions occurring during the prior year. This means that 2022 transactions were reported on the form they received by Jan. 31, 2023. Form 1099-K received in error or with incorrect informationSome taxpayers may have incorrectly received a Form 1099-K, such as for the sale of personal items. In other cases, the form may have been issued in error – such as for transactions between friends and family, or expense sharing. If this happens, or if the information on the form is wrong, contact the issuer of the Form 1099-K immediately. The issuer's name appears in the upper left corner on the form along with their phone number. Taxpayers should keep a copy of all correspondence with the issuer for their records. If a corrected 1099-K cannot be obtainedIf taxpayers can't get a corrected Form 1099-K, report the information on Schedule 1 (Form 1040), Additional Income and Adjustments to IncomePDF, as follows:
The net effect of these two adjustments on adjusted gross income would be $0. Personal item sold at a lossSimilarly, if a taxpayer receives a Form 1099-K for a personal item sold at a loss, report the information on Schedule 1 with offsetting transactions. For example, a taxpayer who received a Form 1099-K for selling a couch online for $700 would report on Form 1040:
The net effect of these two adjustments on adjusted gross income would be $0. Personal item sold at a gainIf a taxpayer sells an item owned for personal use, such as a car, refrigerator, furniture, stereo, jewelry or silverware, etc., at a profit, this is reported as a capital gain. Report the gain as any other capital gain on Form 8949, Sales and other Dispositions of Capital Assets, and Schedule D (Form 1040), Capital Gains and Losses. Mix of personal items sold – some at a gain and others with a lossTaxpayers must report gains and losses separately. Gains for assets cannot be offset by losses from the sale of personal assets. If a taxpayer sold an item owned for personal use at a gain, see Personal items sold at a gain for information on how to report. For personal items sold at a loss, follow the instructions for Personal items sold at a loss. Planning ahead for 2023The American Rescue Plan of 2021 changed the reporting threshold requirement for payment apps, also known as third-party settlement organizations. The IRS announced that the new Form 1099-K reporting threshold will start in tax year 2023.
The threshold change means some people may receive a Form 1099-K who have not received one in the past. There are no changes to what counts as income or how tax is calculated. The IRS will share more information soon about 1099 reporting for 2023 that will be in effect for the 2024 tax season. In the meantime, the IRS reminds taxpayers that money received as a gift or for reimbursement does not require a 1099-K. Taxpayers can minimize the chance of receiving one of these forms in error by asking friends or family members to correctly designate that type of payment as a non-business-related transaction. The taxpayer should also make a note of what the payment was for and who sent it. Good recordkeeping is key. More informationvia Freelancers Union Blog https://blog.freelancersunion.org/2023/04/05/actions-to-take-if-a-form-1099-k-is-received-in-error-or-with-incorrect-information/
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The April 18 tax deadline is quickly approaching. If you haven’t filed your taxes yet and are starting to feel the pressure, you’re not alone. According to a recent IPX 1031 survey, one-third of Americans say they wait until the last minute to file their taxes. But if tax season snuck up on you this year, there’s no need to panic — you can always request a tax extension. Let’s look at how to file an extension for taxes in 2023 and the implications of doing so. What is a tax extension?If you need more time to file your individual federal income tax return, you can request an automatic extension from the IRS using Form 4868. The filing deadline to request a tax extension is the same as filing your return, April 18, 2022. A tax extension will give you an additional six months to file your taxes; this year’s tax extension due date is Oct. 17, 2022. When is Tax Day in 2023?The deadline to file taxes or request an extension in 2023 is April 18, 2023. When is the deadline to file a federal income tax extension in 2023?You must file a tax extension by April 18, 2023. Note that this does not affect the date tax payments are due, just the filing deadline. Can I still file a tax extension for 2022?If you need more time to complete your 2022 tax return, you have until April 18, 2023, to file an extension. With an extension, you have until Oct. 16, 2023, to file your return. Can you file a tax extension after Oct. 15?No. With an extension, you must file your 2022 taxes by the October deadline. The extension deadline is typically Oct. 15 unless that date falls on a weekend or holiday. In 2023, Oct. 15 falls on a Sunday, so the extension deadline this year is Monday, Oct. 16. What is the easiest way to file a tax extension?You can electronically request an extension by filing Form 4868 with TaxAct®. We can help you estimate your tax liability and file an extension for your federal tax return. If needed, we can also help you file any state return extensions. How much does it cost to file an extension on taxes?Filing an extension is free. You just need to submit Form 4868 by April 18, 2023. Will filing a tax extension give me an extension of time to pay my tax bill?No, a tax extension only gives you more time to file your return; it doesn’t give you extra time to pay any taxes you owe. To avoid late payment penalties, you must pay your tax bill by the Tax Day deadline. When you request a tax extension with Form 4868, you can estimate and pay your tax liability for the year. To help estimate your potential tax liability, try to complete your return as much as possible, estimating wherever necessary. What are the pros and cons of filing a tax extension?Filing for an extension is an excellent option for many taxpayers who feel stressed about tax season or have other commitments and need more time. Requesting an extension from the IRS is also easy, and you don’t need to give a compelling reason why you need more time to file. So long as you submit your extension request form on time and correctly, approval is typically automatic, and you’re granted an extension. The downside of filing a tax extension is that it only gives you more time to file, not more time to pay. As discussed in the last section, you’ll still need to estimate and pay any taxes you might owe by the tax filing deadline (April 18 this year). Another trap many extension filers fall into is waiting too long to file. Though an extension gives you an extra six months to complete your income tax return, it’s always best to file it as soon as possible. The longer you wait, the more likely you will forget what happened during the previous tax year. When should I file a tax extension?The IRS doesn’t require a reason for requesting a tax extension and usually grants them without issue. Some common reasons for filing an extension request are:
No matter your reason, if you need more time, ask for it! When shouldn’t I file a tax extension?Since filing for an extension only gives you more time to file but not more time to pay your taxes, you shouldn’t file an extension if you cannot pay your tax bill. An extension won’t be helpful if you owe money you can’t pay. Instead, the IRS provides payment options and will work with you to establish a tax payment plan agreement to break up your tax bill into smaller payments over time. If you have no tax due this year and you’re owed a refund instead, you have up to three years to file a return and claim your refund money. There is no penalty for filing a tax return late when you have no balance due, but if you’re owed a refund, make sure you file so you don’t miss out on that extra cash. We said it before, but we’ll say it again — tax filing doesn’t get any easier as time goes on. Wait too long, and you may risk forgetting essential details about the tax year if it’s not fresh in your mind. This could mean missing out on potential deductions or tax credits. How do I file a tax extension?To request a filing extension on your personal taxes, you will need to use IRS Form 4868. TaxAct® allows you to complete Form 4868 for your federal tax return and file any necessary state extension forms when you e-file. You can also print a paper copy and send it to the IRS via snail mail. Your extension request form requires you to provide simple information about yourself, such as your name, Social Security number, and address. If any of that information has changed since the last time you filed, notify the appropriate organizations before applying for your extension. For instance, you should notify the Social Security Administration if you change your name. If you moved recently, you should inform the IRS with Form 8822. How do I know how much tax to pay with my extension?To finish Form 4868, you need to estimate how much tax you owe. The form helps you calculate this by estimating your total tax liability for the year and subtracting any payments you’ve already made. One problem many taxpayers run into is not having all their tax information yet. If you’re still waiting on important tax documents, try to complete your return as best you can. Rather than leaving something out, try to use estimates for any numbers you don’t have yet. If you are using TaxAct, click Mark as Estimate for any information you need to double-check before officially filing your return. You can also use our separate to help estimate your amount due. When in doubt, it’s better to overpay than underpay. If you overestimated your tax bill and paid too much, you will receive a tax refund for the overpayment. However, you could be responsible for paying interest and penalties if you underpay. The good news is that the penalty for paying late when you’ve requested an extension is significantly less than if you did not receive an extension. What should I do after filing a federal extension?The six-month extension period is often more time than most of us need. Here are a few steps you can follow to help keep your tax return on track:
What about state income tax extensions?If you live in a state that charges income tax, you’ll need to file an extension for your state taxes and your federal taxes. In most cases, a state extension gives you more time to file, not more time to pay. Some states will grant you an automatic six-month extension if you’ve filed for a federal tax extension, but not always. When you file with TaxAct, we make it easy for you. We walk you through completing Form 4868 for your federal return and provide you with any necessary state extension forms. Can I file a tax extension for my business?Yes! Sole proprietors and single-member LLCs can use the same Form 4868 for individual returns. Business owners of partnerships, multi-member LLCs, and corporations also have the option to file a tax extension for their business, though some things work a little differently. For instance, the deadline for partnerships and S corporations to request an extension was March 15. You can read more about this topic in our guide to business tax extensions. All TaxAct offers, products and services are subject to applicable terms and conditions.This article is for informational purposes only and not legal or financial advice.via Freelancers Union Blog https://blog.freelancersunion.org/2023/04/04/tips-for-first-time-extension-filers/
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IRS Tax Tip 2023-37, March 22, 2023 Form 1099-K, Payment Card and Third Party Network Transactions, is an IRS form that is used to report certain payment transactions. If taxpayers receive a Form 1099-K, they should use that information with their other tax records to determine their correct tax liability. Taxpayers must report all their income on their tax return unless it's excluded by law, regardless of whether they receive a Form 1099-K. Taxpayers will receive Form 1099-K for business transactions, including income from:
Money received as a gift or for reimbursement does not require a 1099-K. Taxpayers can minimize the chance of an error by asking friends or family members to correctly designate that type of payment as a non-business-related transaction. The taxpayer should also make a note of what the payment was for and who sent it. Good recordkeeping is key. What to do when a Form 1099-K is incorrectSome taxpayers may have received a Form 1099-K for the sale of personal items, or Form 1099-K may have been issued in error – such as for transactions between friends and family, or expense sharing. If the information is incorrect on the Form 1099-K, taxpayers should contact the issuer immediately. The issuing organization's name appears in the upper left corner on the form. Taxpayers should keep a copy of all correspondence with the issuer for their records. If a taxpayer receives a Form 1099-K in error and the taxpayer cannot obtain a corrected Form 1099-K, the taxpayers should follow the IRS' updated guidance at Understanding Your Form 1099-K. 1099-K reporting threshold for tax year 2023The American Rescue Plan of 2021 changed the reporting threshold requirement for payment apps, also known as third-party settlement organizations. The IRS announced that the new Form 1099-K reporting threshold will start in tax year 2023.
The threshold change means some people may receive a Form 1099-K who have not received one in the past. There are no changes to what counts as income or how tax is calculated. via Freelancers Union Blog https://blog.freelancersunion.org/2023/04/04/what-taxpayers-should-do-when-they-receive-form-1099-k/ |
AuthorI have 5+ years experience working as a medical transcriptionist. When I am not working, I enjoy sports like playing basketball or judo. I love making friends and connections. Archives
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