3 Things to Know Before Filing Your Taxes When You're a Gig Worker

The gig economy has become a mainstream phenomenon, and gig workers are finding success in some creative ways. Gig workers may be delivery drivers, freelancers or even doctors who put in extra hours conducting virtual visits, but no matter what a gig worker does, they still need to pay attention to their tax obligations. Unfortunately, many people who are new to the gig economy aren’t entirely sure what their tax liabilities are, and this can lead to trouble come tax season.

If you’ve found yourself wondering how to deal with taxes as a gig worker this year, below are three things to know before you file:

1. Get Your Paperwork in Order

When you work a traditional job, your employer will usually provide you with IRS Form W-2. This is the tax form that will be used to calculate your tax liability, and it also helps to determine your tax filing status and income bracket.

Gig workers will generally be considered contractors instead of employees. As such, the companies that hire gig workers will usually handle tax reporting for payout processes a little bit differently. IRS Form 1099-MISC is often issued to gig workers, and this form will include information used for tax reporting for payout processes. Form 1099-MISC is issued by each company or client a gig worker serves during the year, so make sure you keep records of all of your work to get the right forms from all of your clients.

2. You Must Withhold Your Own Taxes

Another key difference between working for yourself and working for an employer is the matter of tax withholding. When you work for an employer, your company withholds taxes from each paycheck. When you work in the gig economy, you are usually required to put aside your own tax money to be paid at tax time. Failure to withhold the right amount of taxes may see you end up with a lot of tax debt in April.

3. Your Tax Liability Can Change

You should also note that your tax liability can change as you earn more. While you may start off in one tax bracket at the beginning of the year, you may move into a higher tax bracket by the end of the year. Consider talking with a tax specialist to learn more about how this can affect your situation.

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The Benefits of Using PayPal to Receive Money

PayPal started in 1998 and has since become synonymous with online payments. It's one of the first fintech companies that received widespread attention and is still popular worldwide. The PayPal marketplace solution changed how people shopped online and revolutionized how companies send money to users. But is PayPal still a good method to receive money?

Here are a few benefits that PayPal offers.

Accessibility and Convenience

Whether you're getting money from a client as an independent contractor or you need to get paid for selling items on a marketplace site, PayPal makes it a cinch. Currently, PayPal is available in more than 200 regions around the world. It doesn't matter where your sender operates. PayPal provides easy access to your funds.

But that's not all. The platform facilitates transfers in and out of your account. Keep your money with PayPal or immediately withdraw it. The choice is yours.

Extra Security

Another perk of PayPal is that it offers another layer of protection. Handing out bank account numbers and debit card information comes with risks. Regardless of how much you trust senders, there's always a chance that security issues can arise.

PayPal protects you in many ways. First, it acts as a separate payment source. While the platform does have your bank or debit card information for withdrawals, it encrypts that data to ensure it's safe from prying eyes. Pair all that with built-in fraud protections, and PayPal is one of the safest options around.

Spending Made Easy

We can't ignore how easy PayPal makes spending your money! The PayPal marketplace solution allows you to pay for items in only a few clicks. After receiving your money, you can treat your account like a dedicated online shopping resource.

Instead of typing in debit card information, many retailers utilize PayPal integration to let you make one-click purchases. It's quick, easy and available on millions of websites.

There's a lot to love about PayPal. Many consider it a true classic. But even as other competitors rise, it remains a valuable asset for receiving money.

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Reintroducing Checkout API

We’re excited to announce an updated version of Checkout API, now in general availability. This version delivers a number of new robust features. Now, you can integrate payments into any workflow and any channel with minimal coding through a conversion-optimized, Square-hosted checkout page read more

Guide on What to Know When Working with International Contractors

Hiring international contractors is a great way to tap into a global talent pool. Remote work is more popular than ever, and looking outside your country's borders can give you access to many talented individuals. But there's no denying hiring foreign contractors with unique hurdles to overcome.

Employment Classification

One of the most important things to consider is the contractor's employment classification. There's a big difference between hiring a foreign employee and hiring a foreign contractor. By definition, a contractor is not an employee. The IRS defines independent contractors as individuals who control what they work on and how they do it. In this professional relationship, you would be a client. You'd hold the final result but not how they get there.

Independent contractors pay self-employment taxes. That means you, as a company, don't have to withhold anything.

Steep penalties exist for incorrectly classifying a worker as an independent contractor when they're doing an employee's work. As a result, you must be vigilant about the working relationship.

Tax and Reporting Obligations

It doesn't matter where your international contractors live. You must learn how to pay foreign employees (independent contractors) and what you need to do to remain compliant. That means understanding your reporting obligations.

Research the local tax laws of your contractors. Tax laws are heavily nuanced, and you may inadvertently cause issues for you and your contractor. Many companies will work with agencies to avoid trouble and stay above board.

But that doesn't mean you'll avoid reporting. Companies must report payments made to non-US residents through IRS Form 1099-MISC. Depending on the situation, you may also have to complete IRS Form 1042 or 1042-S.

How to Pay Foreign Employees

You also have to consider how you'll pay contractors for their work. You have many options here. Some companies do simple global wire transfers. But it all depends on the contractor's needs and preferences. Using something like a payouts API platform can give your contractor ample flexibility while streamlining your processes and ensuring compliance across the board.

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What are AML Laws?

Money laundering is a more substantial issue than most people realize. Recent estimates by a United Nations panel say that around 1.6 trillion dollars of dirty money flow into the global financial system. Anti-money laundering (AML) is about fighting this illegal act. AML laws help to uncover illicit activity, protecting financial organizations, businesses, and entire countries.

What is Money Laundering?

When criminals launder money, they disguise ill-gotten gains into legitimate funds. There are many ways to do this, but it usually involves layering transactions to bury paper trails and make funds appear to be honestly earned. Money laundering can hide an assortment of crimes. It often conceals tax evasion, drug trafficking, political corruption, terrorism, and more.

About AML Laws

Whether you're a bank working with high-value customers or a company performing marketplace payouts, AML compliance is paramount. These unique regulations help stop money laundering by requiring organizations to do their due diligence. Instead of working with just anyone, businesses have to know their customer.

Know your customer (KYC) processes are a standard form of AML compliance that requires organizations to collect and verify personal information. Banks must go a step further by understanding the nature of the customer's activity and proving that the money they use comes from a legitimate source.

Verifying information can be a hassle, but it's a necessary step in the fight against widespread money-laundering schemes. In addition to reviewing basic identification data, companies must screen the information against global watchlists, names on a politically exposed person database, and entities under economic sanctions.

Every business must comply with AML laws. It doesn't matter if they're a big bank handing out multi-million dollar loans or simple service providers sending marketplace payouts. Gathering the necessary information and doing due diligence is not something you can avoid. It's not something you want to avoid, either.

AML laws protect companies just as much as they find criminals and prevent large-scale financial crimes. It helps organizations assess their risks and become warier about who they do business with within their everyday operations. It protects the bottom line and helps avoid liability issues.

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