New Gig Act

[bacha29]

Interesting bit of news for contractors. Included as part of so called tax reform is the New Gig Act and has been introduced in both houses of Congress. It's provisions includes language that affords a worker all the so called "freedoms" and "privileges" of an independent contractor but at the same time makes them subject to the same tax withholding as you currently find with an employer/employee relationship. In the past so called "independent contractors " would be hired paid either in cash under the table or flipped a 1099 which in many cases the "contractor" would simply ignore and never pay the taxes owed.
The intent is clear. Curb the abuse of so called "independent contractors" , faster and easier tax collection with better compliance . With the users of contractors having to withhold taxes and with the rights of those contractors more clearly defined the objective is quire clear and that is to force employers to hire people under the guise of what they really are....employees. Let's see Fat Freddy try to BS his way out of this one.

 

[dmac1]

I worked as an independent contractor other than Fedex, delivering newspapers. Under this new tax 'reform' I would have been screwed. With the miles I was driving, at the end of the year my income was usually right around $0 because my mileage deduction at the allowed rate was so much higher than my actual costs. I would have had to wait as long as a year to get refunded for whatever the company deducted.
Having taxes withheld from pay is going to make it a lot harder for contractors who have large expenses to deduct because they may not have the cash on hand to cover. A lot of those workers live paycheck to paycheck. I'd say most.

This may make it harder for companies to find workers, like Uber drivers, and force Uber to pay more to drivers. If you have a $400 a month car payment, $400 in fuel, $400 in insurance, plus maintenance, you will be paying 15% in FICA or over $200 a month out of pocket and need to wait to file and wait for a refund to be reimbused by the IRS, on 'income' that was never really income. IF you owe income taxes, you might be able to pay less in quarterly estimated payments if you have that option.

 

[bacha29]

The proposed bill is narrow in focus and is targeted more toward free lance "techie's" doing per job work for companies in the "gig economy. It will be a while before it expands outward to other sectors of the economy. It is however an important step toward curbing the abuses of workers called "independent contractors" in name only and an effort to collect taxes that would otherwise not have been paid.