This is a guest post by our tax partner, Keeper Tax. Keeper Tax helps independent contractors file taxes. We’ve even negotiated a special $40 discount, just for Chime members! Learn more
If you received income last year from a contracting platform like Uber, Fiverr, or Wag, you were being paid as an independent contractor.
As an independent contractor, your taxes work a bit differently than those for a 9-5 job.
You’re probably not getting a refund
For most 9-5 jobs, the employer sets aside part of each paycheck for taxes. Since most employers over-estimate how much you will owe on taxes, this often results in a tax refund in April.
On the other hand, independent contractor platforms typically don’t withhold taxes for you, and so you’ll owe your entire tax bill in April. It’s possible that if you were doing gig work as a side hustle that you’ll still get a small refund, but if the majority of your income came from independent contracting then you will owe money in April.
Don’t forget to claim tax write-offs!
Working for gig working platforms, there are hundreds of different purchases that will qualify as tax write-offs. It’s important to take the time to review these and claim the ones you deserve, since it can add up to thousands of dollars in savings.
Here are some examples of tax write-offs you may be able to claim:
But be careful! Certain types of write-offs are monitored closely by the IRS and claiming them will put you at risk of audit. Some examples include: clothing purchases, personal hygiene costs, and excessive restaurant expenses. Tax filing software like Keeper Tax will automatically alert you if your tax return might be considered suspicious.
Forgot to keep paper receipts? No problem
It’s a common myth that paper receipts are required for taxes. In reality, any digital record of a purchase made with a credit card, or bank account, constitutes a legitimate expense record for the IRS. The only exception is cash purchases over $75.
You can even use software, like Keeper Tax, to automatically scan your card and bank statements for tax write-offs and save lots of time sifting through your transactions.
This applies to side hustles, too!
It’s a common misconception that the personal standard deduction means part-time contractors don’t benefit from tax write-offs. Fortunately, that’s not the case. Every single dollar you claim in tax write-offs will save you money, up to the point where you might not owe any taxes on your contracting income whatsoever!
Want more tax help? Use Keeper Tax to automatically scan last year’s purchases for tax write-offs. Sign up here
This page is for informational purposes only. Chime does not provide financial, legal, or accounting advice. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for financial, legal or accounting advice. You should consult your own financial, legal and accounting advisors before engaging in any transaction.