For Gig Workers and Business Owners, Taxes Are Even Trickier Now

Filing taxes has never been simple for freelancers and business owners, but the pandemic has made it far more complex.

By Stacy Cowley

Tax time is always complicated for freelancers and business owners, but this year, it’s especially swampy.

Pandemic relief programs that helped small companies and self-employed individuals created new tax challenges. And many people had unusually jumbled patchworks of jobs and income sources last year.

“I’m kind of scared,” said Celeste Holcomb, an artist and designer. In 2020, her income included book royalties; fees for illustration, design jobs and work done through a gig platform; wages from a contract job at a university publisher; and, for several months, unemployment benefits. Ms. Holcomb, who plans to do her taxes herself, expects to spend hours wading through records and tax documents to figure out what she owes.

Even tax pros are struggling, thanks to a raft of last-minute changes Congress included in December’s economic relief package. “We have more than 100 clients, and if I have five that file on time this year, it’ll be a miracle,” said Meghan Blair-Valero, the founder of Fogged In Bookkeeping, which specializes in small business accounting.

Here are some of the tax issues small business owners are facing this year and advice for navigating them.

Paycheck Protection Program

The government’s primary small-business relief program backed $523 billion in loans last year — to more than five million businesses. The loans are to be forgiven by the government if the recipients comply with the rules. Forgiven debt is usually taxed as income, but Congress exempted Paycheck Protection Program loans from that requirement.

Source: Read Full Article