taxable income - Linkenheimer LLP CPAs & Advisors

Gig Workers Should Understand Their Tax Obligations

The number of people engaged in the “gig” or sharing economy has grown in recent years. In an August 2021 survey, the Pew Research Center found that 16% of Americans have earned money at some time through online gig platforms. This includes providing car rides, shopping for groceries, walking dogs, performing household tasks, running errands and making deliveries from a restaurant or store.

There are tax consequences for the people who perform these jobs. Basically, if you receive income from an online platform offering goods and services, it’s generally taxable. That’s true even if the income comes from a side job and even if you don’t receive an income statement reporting the amount of money you made.

Traits of gig workers

Gig workers are those who are independent contractors and conduct their jobs through online platforms. Examples include Uber, Lyft, Airbnb, Angi, Instacart and DoorDash.

Unlike traditional employees, independent contractors don’t receive benefits associated with employment or employer-sponsored health insurance. They also aren’t covered by the minimum wage or other protections of federal laws, aren’t part of states’ unemployment insurance systems, and are on their own when it comes to training, retirement savings and taxes.

Tax obligations

If […]

By Linkenheimer LLP|2022-01-05T00:51:20+00:00January 5th, 2022|1099, individuals, tax planning, taxable income|0 Comments

Protective Refund Claims for ACA-Related Income Taxes

Earlier this year, the U.S. Supreme Court recently announced they would hear a case that challenges whether the individual mandate under the Patient Protection and Affordable Care Act (ACA) is constitutional. It is possible that if the mandate is ruled to be unconstitutional, incomes taxes established under the ACA may effectively be repealed and any ACA-related income taxes paid in prior years may be refundable if a timely claim for a refund is filed. The Supreme Court will hear the case this fall and they are expected to render a decision by early 2021.

Income taxes established under ACA went into effect in 2013. These include the Net Investment Individual Income Tax (NIIT), which has a rate of 3.8% for certain net investment income of individuals, trusts and estates. Taxpayers must have both net investment income and modified adjusted gross income over the following thresholds for the NIIT to apply.

Filing Status	Threshold Amount
Married filing jointly	$250,000
Married filing separately	$125,000
Single	$200,000
Head of household	$200,000
Qualifying widower with dependent	$250,000

In addition, the ACA tax includes a .9% Additional Medicare Tax, which applies to individuals’ […]

By Linkenheimer LLP|2020-09-03T20:02:08+00:00July 31st, 2020|investment, irs, refunds, tax planning, taxable income|0 Comments

Even If No Money Changes Hands, Bartering Is A Taxable Transaction

During the COVID-19 pandemic, many small businesses are strapped for cash. They may find it beneficial to barter for goods and services instead of paying cash for them. If your business gets involved in bartering, remember that the fair market value of goods that you receive in bartering is taxable income. And if you exchange services with another business, the transaction results in taxable income for both parties.

For example, if a computer consultant agrees to exchange services with an advertising agency, both parties are taxed on the fair market value of the services received. This is the amount they would normally charge for the same services. If the parties agree to the value of the services in advance, that will be considered the fair market value unless there is contrary evidence.

In addition, if services are exchanged for property, income is realized. For example, if a construction firm does work for a retail business in exchange for unsold inventory, it will have income equal to the […]

By Linkenheimer LLP|2020-09-03T20:02:13+00:00July 20th, 2020|business, credit, irs, tax planning, taxable income|0 Comments

Answers To Your Questions About 2020 Individual Tax Limits

Right now, you may be more concerned about your 2019 tax bill than you are about your 2020 tax situation. That’s understandable because your 2019 individual tax return is due to be filed in less than three months.

However, it’s a good idea to familiarize yourself with tax-related amounts that may have changed for 2020. For example, the amount of money you can put into a 401(k) plan has increased and you may want to start making contributions as early in the year as possible because retirement plan contributions will lower your taxable income.

Note: Not all tax figures are adjusted for inflation and even if they are, they may be unchanged or change only slightly each year due to low inflation. In addition, some tax amounts can only change with new tax legislation.

So below are some Q&As about tax-related figures for this year.

How much can I contribute to an IRA […]

By Linkenheimer LLP|2020-09-03T20:03:16+00:00March 5th, 2020|401k, deduction, deductions, ira, social security, tax deductions, tax implications, taxable income|0 Comments

Bartering: A Taxable Transaction Even if Your Business Exchanges No Cash

Small businesses may find it beneficial to barter for goods and services instead of paying cash for them. If your business engages in bartering, be aware that the fair market value of goods that you receive in bartering is taxable income. And if you exchange services with another business, the transaction results in taxable income for both parties.

Income is also realized if services are exchanged for property. For example, if a construction firm does work for a retail business in exchange for unsold inventory, it will have income equal to the fair market value of the inventory.

Barter clubs

Many business owners join barter clubs that facilitate barter exchanges. In general, these clubs use a system of “credit units” that are awarded to members who provide goods and services. The credits can be redeemed for goods and services from other members.

Bartering is generally taxable in the year it occurs. But if […]

By Linkenheimer LLP|2020-09-03T20:03:50+00:00July 2nd, 2019|1099, business, tax implications, tax planning, taxable income|0 Comments