Happy tax filing month. To help celebrate, this month’s newsletter includes a fun tax quiz exploring tax laws created by states trying to capture other state’s tax revenue. There is a reminder to help your favorite charitable organizations retain their non-profit status and reasons to file a tax return even when you are not required to do so. An interesting article discussing the new Gig economy term used by our political candidates rounds out this month’s newsletter.
Should you know of someone who may benefit from this information please feel free to forward this newsletter to them.
2015 Tax Quiz
Historically, nexus laws protect consumers and businesses from paying taxes to states where they do not visit or live. These laws are intended to protect interstate commerce. With the lack of strong federal tax guidance, many states are now passing fairly creative laws to reach into the pockets of their fellow states’ tax revenues. Can you match the creative law with the state?
Given the copy-cat nature of state revenue departments, it is possible that many more states have followed the lead of those mentioned here. Your best defense is to know the rules and support establishing legislative clarity at the federal level from our elected officials.
Non-profit Annual Filing Due
Annual reporting is required for all organizations that wish to keep their non-profit status intact. The due date for this filing is May 16, 2016 for calendar year organizations. How can you help ensure your favorite charities stay compliant?
Understanding the Gig Economy
Some believe that by the year 2020 40% of all jobs will be part of the Gig Economy. So what is this phenomena and how can you take advantage of it?
It’s all in the name
The “Gig Economy” is a morphed description of old titles like the “peer-to-peer” business model and crowd sourcing. What it refers to is the ability to control when and where you wish to work. Quite like the musicians of old who worked their music gigs, this gig concept is spreading far and wide.
Where the Gig is exploding
|Financial services. Even your savings can be put out on a “gig” service. Places like Lending Source and Funding Circle provide a platform to match lenders with those who wish to borrow your money for a time.|
|Referees and game officials. Want to earn money officiating sporting events? Many services are popping up that allow officials to enter their available schedule and locations they are willing to travel to officiate games. They are then assigned games and paid through the same on-line app.|
Does it work for you?
This new way to match labor supply with demand is becoming more popular. Here are some things to consider before getting too involved in the gig economy.
|Contractor versus employee. Almost all these service companies treat you as an independent contractor. You are responsible for your Social Security and Medicare taxes. You must get your own benefits and send in estimated tax payments.|
|Part-time versus full-time. If you are a recently retired worker, picking up some part-time gigs will keep you socially connected and earn some extra income. Making this a full-time occupation can be more of a challenge.|
|Legal landscape. As the gig economy booms, so does the potential for legislation that changes the landscape. Many local cab companies are trying to squash services like Uber. Local hotels are trying to limit the ability for you to rent lodging. Worker’s liability coverage also needs to be considered if something goes wrong.|
|Urban versus rural. Gig opportunities tend to be located in large metropolitan areas. Depending on this employment for your income in remote areas might be tough.|
The problem the gig economy solves is more readily matching supply with demand. This puts the old business models at risk. Anticipate more attention in this area as legislative action tries to balance the power of this new job creation device with a dramatic redefinition of employment no longer centered within vast company payrolls.
You Still May Wish to File a Tax Return
Too many taxpayers fail to file a tax return under the false notion that one is not required to pay income tax. This assumption can cause problems. Here are some examples of when to file a tax return even when not required to do so.
|Wish to qualify for Premium Tax Credit. This tax credit helps reduce the cost of health insurance for those who purchase their insurance through the new health insurance marketplace. Without a filed tax return you cannot have the Premium Health Credit applied towards your monthly premiums. In fact, non-filing could limit your ability to receive this credit in future tax years as the IRS continues to place controls on the payment of this credit.|
|You are filing a final tax return for a loved one. The IRS will eventually receive death information through the Social Security Administration. By filing a final tax return, you can put the breaks on unwanted communication from the IRS as they wait for this confirmation.|
|You want withholdings returned to you. Always file a tax return if an employer or other supplier withheld tax funds. It is the only way you will receive them back from the federal government.|
|You wish to protect against someone else filing a tax return. With the vast increase in identity theft from the IRS, filing a tax return can close the door on would-be thieves. Your filed tax return can block attempts by someone else who files a second tax return with fake information.|
As always, should you have any questions or concerns regarding your situation please feel free to call.
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