Member-only story
The IRS and the Gig Economy
There’s No Free Lunch
First things first — we can all simmer down about the $600 reporting rumor. It’s just not true. The IRS will not monitor all bank accounts over $600. Pretty much everyone decided that was just burdensome to monitor. The thing is, though, that the government got wise to the whole gig economy, and the fact that lots of folks were dodging what are actual, legitimate taxes because many of the transactions are so small.
Janet Yellen acknowledged that the largest gap in tax payment doesn’t come from lower-income individuals but rather from the wealthy, but still. The threshold will be set to accommodate reporting for deposits and withdrawals at a number larger than $600, but likely not in the thousands. Banks already must report interest payments larger than a measly $10, so gig economy workers will indeed be held to account for earnings on which they haven’t exactly been transparent about taxes.
Where the $600 rule IS in play is that gig workers (all workers, really) who earn $600 or more are now responsible for reporting those earnings. It used to be that you had to earn $20k or have 200 transactions before the third-party you worked with triggered an automatic 1099, but now the bar is much lower. $600 now triggers the automatic creation of a 1099 so Uncle Sam can take his slice of the pie.
