Tax Planning and the Gig Economy

It's my dream to be a homeowner — paint the bathroom green, update lighting fixtures, choose the backsplash, you get the idea. However, when I did the math, the combined salaries my husband and I make means this won't be a reality for a while.

To help achieve my goal sooner, I turned to the gig economy, finding freelance employment as a Form 1099 writer and editor. Gig workers — who often identify as 1099 workers — are self-employed independent contractors who provide support to one or more other businesses, or are small-business owners themselves.

While I am closer to realizing my goal, 1099 work has complicated my family's tax filing. Here are a few tips I've learned, which can help you as a 1099er too.

Making Quarterly Payments

Organization is key. In fact, the six P's of "Prior Proper Planning Prevents Poor Performance," encompass the situation pretty well. The Internal Revenue Service has set the following quarterly deadlines for 1099 workers to pay estimated taxes: Jan. 15, April 15, June 15 and Sept. 15.

Be sure to check if any current events or special circumstances have impacted the quarterly deadlines and bookmark the IRS website, which has many useful tools for 1099 workers. Those I've found most helpful include:

• The Tax Withholding Estimator to ensure I set aside enough income to cover quarterly filings
• An online payment portal
• This no-cost webpage to file annual taxes

As a 1099 worker, when you file your annual taxes, each business that paid you at least $600 should send you a Form 1099-MISC.

One of the best tips for working in the gig economy is to seek professional advice if you are unsure. This is where Military Tax counselors can help. These professionals are specially trained to help service members and their families understand tax implications for gig workers and small-business owners. Those looking for further information can contact Military OneSource 24/7 to schedule an appointment with a MilTax consultant.

Tracking Expenses

"Would you like your receipt?" How many times do we hear that question each week? The answer for 1099 workers is always: Yes! Keeping track of and leveraging receipts into deductible fees is another key to success when you're self-employed.

Good record keeping includes a summary of all income from every company with which you contract, all business transactions and gross income, as well as your deductions and credits.

The type of work you do will determine the types of deductions you may take. Expenses incurred to complete an assignment, including mileage, shipping and internet use, as well as startup costs, business assets and use of personal items for business purposes, are all deductible. Keep in mind, it's important to have proof to back up what you choose to deduct.

You can learn more about what is and is not deductible on the IRS website.

Something To Consider

One thing to note about 1099 employment is that income earned in the gig economy by service members or their family members is not protected under the Servicemembers Civil Relief Act. While the SCRA can help defer income taxes if your ability to pay is affected by your military service, this does not apply to taxes on income gained as a 1099 worker. You can read more about these implications on Military OneSource.

Choosing Your Path in the Gig Economy

Nearly everything counts in the gig economy — renting property, running errands, selling goods online, providing professional services and providing child care. The best advice I can give someone looking to join the gig economy is:

• Remember your six P's.
• Be sure to set aside enough income to cover quarterly taxes.
• Create an orderly timeline and file your taxes promptly.
• Maintain complete and accurate records.
• Seek professional financial advice, when necessary.

Once you feel confident, be sure to have fun and remember you're one step closer to achieving the financial goals you've set for yourself and your family.

The Office of Financial Readiness is here to support you as you complete your service-required financial training. Follow us on Facebook, Twitter, Instagram and YouTube — and download the Sen$e app for financial tips on the go! If you are a military spouse looking to enter the gig economy, you may find additional helpful resources on the MilSpouse Money Mission website.

Emily Gowdey-Backus is a freelance writer and editor who has worked in the gig economy for nearly 10 years.