The gig economy refers to a market system in which temporary positions are common and organizations hire independent workers for short-term commitments. For workers, this presents a precarious form of working, without the guarantee of work, few (if any) benefits, and low pay.
The term “contingent workers” applies slightly more widely, and this includes freelancers, independent contractors, consultants, and other non-permanent workers who are hired on a per-project basis. When freelancers and gig economy workers are combined, the number in the U.S. rises to 57 million people, typically working between 11 and 30 hours per week.
Looking at the tax and financial challenges, Kobina Ansah, Founder of Coverr, who is a business financing provider for gig economy workers, explains to Digital Journal why these groups of workers need special provisions.
According to Ansah, reform is needed. The finance professional states: “The current lack of clarity and instruction around when and how independent contractors are expected to submit their 2020 taxes is similar to the confusing deployment of the government’s Paycheck Protection Program loans last year.”
Providing a case study, Ansah says: “One of our customers, an Uber driver in the New York City area, shared that he thought his deadline was in May and was actually unaware that he would have to file in April.”
The process of informing people has led to a series of problems. Here Ansha acknowledges: “Because of this lack of communication, we will likely see many gig economy workers experience additional operational stress and worse than that, incur unnecessary fines.”
These types of fines matter, especially to gig economy workers, many of who tend to be low paid. According to Ansah: “Regardless of how small the expense for a tax submission might be, following a year as volatile as 2020, we should be working toward eliminating additional expenses for these workers.”
Tax Deadlines Changed
The deadlines for individuals to file and pay most federal income taxes are extended to May 17, 2021. Get details on the new tax deadlines and on coronavirus tax relief and Economic Impact Payments.
