Are You Part Of The Gig Economy?
Taxpayers who are independent contractors are among those with the highest likeliness to not accurately report their income at filing time. For this reason, so called ‘gig economy’ workers have probable cause to be wary of tax collectors.
At the beginning of summer, 2017 the National Association of Enrolled Agents surveyed 2,300 members and deduced the most common reason individuals will get a CP2000 notice. A CP2000 simply means that “the income and/or payment information we have on file doesn’t match the information you reported on your tax return.” This could result in your tax bill changing substantially.
The survey showed that failing to report payment for work performed, working as an independent contractor was the number one reason agents gave out a CP2000 form. the number of those who noted the issue stood at a high 60.2%. 38.5% stated that taxpayers are simply rushing to file before they have all the necessary information it requires to do so. This could be the case as an independent contractor as you may have multiple 1099s and W-2s.
The IRS records also show that self-employed workers who file are likely to get their filings wrong. The exact number of those who are underpaying their taxes rose up from 7.2 million on average in 2010 to 10 million by the year 2015. The penalty for filing taxes incorrectly declined in accordance with the high number of those filing wrong. The fee dropped from $210 dollars to $130.
Friday Burke, an agent and the founder of Dr. Friday Tax & Financial Firm in Nashville Tennessee, stated that “Usually it’s because they completely forgot something the happened.” People miss a lot of expenses…they don’t know what they’re entitled to deduct, especially if they’re in the gig economy and especially if they have multiple endeavors.”