Time for what you ask? U.S. Tax Day is April 18, 2017
If you call the United States home, there is no way around it. Uncle Sam has arrived to ask for cash to fund social security, strengthen the military, reduce the national debt, pave our roads, or whatever else the government decides is a good use for our tax dollars. Unfortunately, even if you do not agree with how these dollars are spent, you are still expected to pay your taxes.
A few tax statistics you may find interesting:
- The instructions for the 1040 are over 100 pages long (just the instructions).
- The average U.S. taxpayer spends 13 hours preparing their annual tax return.
- Individuals with over $1 million in income have about a 12% chance of being audited. Mo’ money mo’ problems.
- If you make less than $1 million in income and you are self-employed, you stand a 3% chance of being audited.
- The average refund is 41% less than it was at this time last year. Have you been making your estimated payments?
What can we take away from these numbers?
Perhaps, the increase in independent contractors resulting from today’s gig economy may have something to do with the delay in filings. Individuals that are new to freelancing for Uber, Lyft, Postmates, etc. may find themselves in a more complicated tax situation this year, than in years prior. Thus, it makes sense that they would delay the headache until they are ready to tackle their paperwork head on. Likewise, provided the fact that independent contractors and freelancers do not have withholdings automatically taken out of their paycheck, as is done for employees/W-2 recipients, they are less likely to end up in a refund position, especially if they have not kept up to date on their estimated payments. Simply put, most people who are new to the ‘world of freelancing’ do not pay their estimated quarterly taxes.
Some other useful information we can extract from these statistics is that there are way too many instructions and regulations, but that is no surprise. In addition, if the average time taxpayers take to complete their return is 13 hours, there is a whole day taken out of what could have been an enjoyable weekend. Consider it a full day and a half at work that eats into your weekend.
Lastly, it seems the chance of being audited is relatively slim if you are not making a substantial income. However, there is still an audit risk if you are filing a schedule C, which all freelancers must file.
While you may find some comfort in these numbers, there are countless horror stories for those that found themselves on the wrong end of the tax law. It is always better to be safe, than to be sorry, so the best suggestion would be to do your homework and understand the forms that you are filing with your tax return, as well as maintain decent records for all your deductions, and make sure all income is reported.
So the question that remains is…what’s the most painless solution to getting this problem resolved and off your to-do list? Queue in Taxfyle, a CCBill Integration Partner. Taxfyle’s done-for-you solution connects you and your small businesses to a licensed professional, ready and willing to take the weight off your shoulders and save your weekend of leisure. Taxfyle has hundreds of credentialed CPAs and EAs picking up jobs within seconds of submission. Simply answer of few simple questions from your desktop or mobile device, receive an upfront quote for services, and engage a professional. You will be able to chat and exchange documents through the encrypted platform and work with your pro to come to the best answer on your tax return. It’s important to note, Individual returns filed through Taxfyle automatically receive three-year audit protection... something that could come in handy down the line.
By Guest Contributor Taxfyle, CCBill Integration Partner