Hit & Run : Reason.com: A key provision in the tax bill that Senate Republicans unveiled yesterday clarifies the role of workers in the so-called "gig economy." It also sets up a showdown over whether platforms like Uber and Airbnb will be required to withhold taxes on behalf of their users.
4 comments:
I’m not sure I entirely understand all of this. It seems like people like Uber drivers are essentially acting as independent contractors for Uber each time they have a passenger. On the other hand, Uber drivers might be considered employees, most of whom would be part time. For a lot of people this would be supplemental income and they might not have to pay tax on it anyway, depending on how much is earned. It certainly is confusing. I think the important part of this is how to categorize these kinds of workers and the answer might be in a new category. The rules are pretty clear for employees and independent contractors as far as taxable income goes. There are also tests to determine if one is an employee versus contractor. It sound like the thing most needed is a test to see if a gig worker is an employee or contractor.
I gig work. I’ve worked for companies as an independent contractor. Taxes are a nightmare. The current tax code is burdensome on small business and those who earn like I do. You almost need an accounting degree to be able to read and understand the darn things. To simplify my taxes, I am working on becoming my own company. The venue can then hire the “company” and pay an invoice. It means I am not stuck filling out paper work to be put as an independent contractor in their system, and come tax time, I will have a better handle on taxes and earnings. I was always told that every gig worker should incorporate as an LLC. Limit your liability and your tax burden. I don’t mind paying my share of taxes, I’m all for it, but I just want to be in a position where I don’t have a 4000.00 tax bill at the end of the year. Also, having an invoice means I can take credit card and not have to wait for that check in the mail.
Part of me thinks that it would be a really good idea to move forward with this amendment, simply for the case of clarifying what the heck Uber drivers, Postmates, and Airbnb hosts actually are in terms of the tax code. To me they definitely feel like they should be classified as independent contractors, as each service is technically just contracting them to do their bidding. This article didn't seem to present too many strong arguments as to why this would be unreasonable for the services to do, other than this idea that it will stifle other platforms from entering the market to compete. However, I don't see why an online service should have less restrictions than any normal business, which would be required to hire people either as employees or contractors and wouldn't have the option to be in this weird go-between state that all of these platforms are currently working under.
Regardless of people’s political opinions about the other aspects of this bill, it is nice to see that certain aspects of our tax code are being updated to reflect the modern reality of our economy that laws from 1986, which predate the internet, let alone smart phones and social media, do not take into account. These changes certainly sound like they will make it easier for both and employees and employers in the GIG economy to have a clear understanding of their relationship. Moreover, this clarification and simplification will make it easier, less costly, and less time consuming for GIG workers to be able to understand what their full tax burden is. In cases where they would have been underpaying taxes, tax revenue will go up, and in cases where they are paying the correct amount by using an expensive tax professional they will save money there. This seems like a very positive change.
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