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New tax law and the "gig" economy
Posted on 1/1/18 at 12:57 am
Posted on 1/1/18 at 12:57 am
At a bowl watching game in Hattiesburg, 2 part time professors ("adjunct") were talking about the new tax law.
Since they are already independent contractors (no health or retirement benefits, etc.) they will qualify under the new 20% exclusion from earnings. See discussion:
"Management consultants may soon strike out on their own, and stockbrokers may hang out their own shingle. More cable repairmen and delivery drivers, some of whom find work through gig economy apps like Uber, may also be lured into contracting arrangements."
"That’s because a provision in the tax law allows sole proprietors — along with owners of partnerships or other so-called pass-through entities — to deduct 20 percent of their revenue from their taxable income."
I assume they will have to pay full SS tax (15.9% v 7.45%?).
My wife works 25-30 hours per week at an accounting firm (avg. $1000 per week) and wants to know if it will also work for her.
Anyone heard anything about this?
Since they are already independent contractors (no health or retirement benefits, etc.) they will qualify under the new 20% exclusion from earnings. See discussion:
"Management consultants may soon strike out on their own, and stockbrokers may hang out their own shingle. More cable repairmen and delivery drivers, some of whom find work through gig economy apps like Uber, may also be lured into contracting arrangements."
"That’s because a provision in the tax law allows sole proprietors — along with owners of partnerships or other so-called pass-through entities — to deduct 20 percent of their revenue from their taxable income."
I assume they will have to pay full SS tax (15.9% v 7.45%?).
My wife works 25-30 hours per week at an accounting firm (avg. $1000 per week) and wants to know if it will also work for her.
Anyone heard anything about this?
5
Posted on 1/1/18 at 6:26 am to matthew25
S-Corp only pays FICA on W-2 wages, not net profit.
Posted on 1/1/18 at 7:38 am to matthew25
So basically set up a PC to make a pass through then couple that with business expense write offs?
Am I following?
Am I following?
Posted on 1/1/18 at 7:23 pm to HailToTheChiz
I don't see why any paperwork is necessary.
A solo doesn't file with the Secretary of State, nor does a partnership
And, as the Bob Corkern article (above poster) notes: "This fight relates to the taxation of "pass-through" business income — income from entities like S-corporations and limited-liability companies that do not pay their own taxes, but pass their income through to their human owners, who then pay tax on that income on their individual income tax returns" just as sole proprietorships and partnerships file.
A solo doesn't file with the Secretary of State, nor does a partnership
And, as the Bob Corkern article (above poster) notes: "This fight relates to the taxation of "pass-through" business income — income from entities like S-corporations and limited-liability companies that do not pay their own taxes, but pass their income through to their human owners, who then pay tax on that income on their individual income tax returns" just as sole proprietorships and partnerships file.
This post was edited on 1/1/18 at 7:28 pm
Posted on 1/1/18 at 10:11 pm to matthew25
There's a few things to consider here.
1) There are some significant benefits to being an employee. Benefits such as health insurance, being able to share the FICA tax with your employer, etc.
2) We still have employee vs independent contractor issues. A cable repairman who gets all his jobs from one cable company, a delivery driver who gets all his jobs from one company, etc... they are going to have difficulty showing they are truly independent.
I think you are going to see a lot of new rulemaking in this arena.
1) There are some significant benefits to being an employee. Benefits such as health insurance, being able to share the FICA tax with your employer, etc.
2) We still have employee vs independent contractor issues. A cable repairman who gets all his jobs from one cable company, a delivery driver who gets all his jobs from one company, etc... they are going to have difficulty showing they are truly independent.
I think you are going to see a lot of new rulemaking in this arena.
Posted on 1/2/18 at 5:55 pm to matthew25
Most professionals like the stockbrokers you mentioned , attorneys, cpa, etc do not qualify for that reason. They correctly didn’t want everyone becoming their own Llc.
Posted on 1/2/18 at 10:15 pm to LSUFanHouston
CPA - but if the professors do not get health insurance, retirement, vacations, holidays, attend meetings, have no office, provide own telephones and computers and printers, and can turn down assignments b/c of other work, can the IRS classify them as employees, or gig workers?
Posted on 1/3/18 at 11:37 am to matthew25
quote:
CPA - but if the professors do not get health insurance, retirement, vacations, holidays, attend meetings, have no office, provide own telephones and computers and printers, and can turn down assignments b/c of other work, can the IRS classify them as employees, or gig workers?
Adjuncts in the situation you describe, I think would be considered independent contractors. But most adjuncts have another job.
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