Instacart, Uber, Amazon Flex, DoorDash – these and other gig-worker jobs were a nice side hustle for many people. Since the pandemic began, they’ve helped some laid-off workers keep the wolf from the door.

When you spend all your time putting out that day’s fires, you might not have stopped to think how gig-worker income would look at tax time. Now’s the time to start thinking about that, advises personal finance expert Liz Weston.

“Your taxes just got more complicated,” Weston writes in an Associated Press piece called “What gig workers need to know about taxes.”

And how: You have to pay taxes not just on what you earned, but also more than your usual share money toward Medicare and Social Security. “Self-employment tax” works out to a whopping 15.3 percent of your income.

There are a few upsides. For example, you could potentially deduct a portion of certain expenses, including but not limited to transportation, Internet/phone and a home office.

Another bonus: You can contribute to a retirement plan such as a SEP-IRA. And you can even deduct half of the self-employment tax when you file.

While tax software can help, Weston suggests hiring a tax professional if this is the first year you’ll be filing taxes as a self-employed worker. “There are enough gray areas and complications to gig work taxation that having help from a pro can pay for itself,” she says.

Whatever you do, make sure you don’t skip out on payment altogether. Existing stress from the past year plus the fear of owing money could tempt some serious foot-dragging. Fact is, you might very well owe money – and you might not have that cash right now. But the IRS will set up a payment plan, Weston says, and that’s ultimately cheaper than paying a failure-to-file penalty.

 

4 things you could win

 

Savings.com is giving away five $100 Visa e-gift cards in what it’s calling the #HPPresidentsDayGiveaway. This is a quick-turnaround event, ending at 11:59 p.m. PST Wednesday, Feb. 17. 

Wealthy Nickel is giving away a $100 Amazon card. Enter by 11:45 p.m. CST Feb. 28. 

Fresh Giving has put a $25 Amazon gift card up for grabs. This one ends on Feb. 28, too.

A site called Gamestingr is giving away an Xbox Series X. Not a gamer? Then accept the alternative prize – $500 into your PayPal account – if you win. The giveaway ends on March 6.

 

Short takes

 

Healthcare for seniors: Stacy Johnson of Money Talks News now has a podcast called “Money!” (Love his enthusiasm.) This week’s episode is called “Everything You Need to Know About Medicare.” Stacy joined Medicare himself last month, and says it wasn’t the hardest thing in the world – but that the system does have a bunch of moving parts. If Medicare is in your immediate future, give the podcast a listen; if you know someone who’s staring down the barrel of the big 6-5, share the link.

Changing course?: According to a Pew Research study, two-thirds of unemployed adults have considered changing their occupations or at least their fields of work since COVID left them jobless. This is true among lower-income adults as well middle- or upper-income workers. Also, 49 percent) say they’re pessimistic about finding work in the near future and 31 percent say they are “very pessimistic” about their chances.

The moral of the story: Don’t ask your laid-off family/friends how the job search is going, or whether they’ve found work yet. If they want you to know, they’ll tell you – and if they find work, they’ll want to tell everybody.

Savings vs. debt: Bankrate.com’s February Financial Security poll notes that 54 percent of U.S. residents have more in their emergency funds than they carry in credit card debt. A little over one in four of those polled (27 percent) have more credit card debt than they have in their EFs.

How times change: This actually sounds smart to me. I mean, I hate credit card debt more than psoriasis, but given the current economic grimness it just makes sense to put minimum payments on the debt each month in order to beef up the cash savings. Plenty of landlords don’t take credit cards, after all, and at some point if those cards get maxed-out you’ll need cash for frivolities such as food and (minimum) utility payments.

Stay afloat until things get better, and use as many frugal hacks as you can to keep adding to the credit card debt burden.

Readers: How are your emergency funds doing?