Now more than ever before, more Connecticut residents are gig workers. Gig workers are considered small business owners. They work for themselves by taking on business opportunities offered through larger companies — such as Uber and Airbnb, among a number of others. Being a gig worker can be a good deal and offer good money, but it can also cause some income tax problems.
Small business owners are affected by a number of extra tax rules. This is something of which many people are not aware. Some individuals may be surprised at tax time when they learn they owe the Internal Revenue Service a big chunk of change that they were not expecting to have to pay. For example, self-employment tax is quite a bit higher than regular income tax and is something gig workers have to pay, which can greatly increase their tax obligation.
On top of paying self-employment taxes, small business owners may have to pay estimated taxes. These are tax payments made quarterly rather than making one payment during tax season. Those who do not make these estimated payments may end up having to pay penalties on top of their tax bills for failing to pay the government on time throughout the year.
Problems may arise if gig workers fail to report cash payments, write off personal expenses, fail to file tax returns or fail to pay their tax debt in full. If a person is upfront and honest with the IRS about their struggle to pay their tax debt, relief may be offered. If a person tries to hide things from the IRS, the government will not be so kind.
Gig workers in Connecticut who are faced with income tax problems because of their choice of employment can turn to legal counsel for assistance. An attorney can help one tackle audits, deal with accusations of tax non-payment or file failure, work to settle tax debt or help defend one against accusations of tax crimes — among other things. With the right assistance, working through most tax problems is possible.