Freelancers, 1099 contractors and gig workers face unique challenges when it comes to taxes: itemizing all business expenses, covering their own Social Security and Medicare taxes and a lack of an employer to withhold taxes. That last one catches a lot of first-year freelancers off-guard, leading to a big tax bill in April. “A lot of people think if they made less than $14,600, which is the standard deduction for single filers, they don’t have to pay,” said Bill Park, founder of TaxHakr. But, according ...

Core Insights - Side hustles are increasingly common in the modern economy, leading to new tax responsibilities that individuals may not fully anticipate until tax season arrives [2] - Understanding how to track, report, and maximize deductions for side income is crucial for compliance and minimizing surprises during tax filing [2] Taxable Income - Income from gig work, freelancing, or self-employment is generally taxable, regardless of the payment method used [3] - All business income must be reported, even if no 1099 form is received, as the IRS differentiates between business income and hobby income [4] Organization and Recordkeeping - Accurate recordkeeping is essential for reducing stress during tax season, including maintaining a log of all business-related income and expenses [5] - Common documents for recordkeeping include receipts, invoices, mileage logs, and proof of home office expenses [7] Technology and Tools - The IRS recommends keeping tax return records for three to four years, and digital bookkeeping tools can aid in tracking business transactions [6] - Financial professionals suggest leveraging technology for managing business revenues and expenses, with platforms like QuickBooks being highlighted for their effectiveness [6]

Core Insights - The IRS has penalized American taxpayers over $162 million for falsely claiming tax credits, often influenced by misleading online advice [1] Group 1: Tax Misconceptions - Misleading tax advice from social media influencers and scammers has become common, making fact-checking essential to avoid legal issues [1] - A popular misconception is that receiving a raise leads to a higher overall tax burden, which is a misunderstanding of the U.S. progressive tax system [4][5] Group 2: Tax Strategies and Legalities - The "Overseas Zero Tax Strategy" suggests that moving to different countries can legally avoid income taxes, but U.S. citizens must report all income earned abroad [3][4] - Claims of writing off personal expenses as business deductions are often illegitimate; the IRS requires that deductions be "ordinary and reasonable" [6][7]