Blog

Keep up to date with the latest

7 Tax Deductions Gig Economy Drivers Might Forget About

Have you seen commercials for TurboTax and H&R Block promoting their tax filing software solutions? It’s that time of year. For many people tax season can be stressful. Especially individuals who anticipate owing the IRS money.

People who made money in the gig economy are likely to owe the government money since companies like Uber, Postmates, and DoorDash don’t withhold taxes from their weekly earnings. If you made money through any on-demand or gig economy businesses in 2016, you’re going to want to maximize your deductions and pay fewer in taxes.

I covered the business related deductions that drivers might be eligible for in a previous post. But there are other deductions that you can take advantage of, many of which the majority of people don’t even know about.

Here are 7 tax deductions that you might not know about:

Glambling tax deductions

Gambling losses

You can deduct your losses from gambling in lotteries, raffles, horse and dog races, casino games, poker games, and sports betting. But there are caveats. The amount you deduct cannot exceed the amount you report as winnings. If you won $5,000 in 2016 through gambling and lost $8,000, the maximum deduction you can claim is $5,000. You have to report both winnings and losses to take advantage of this deduction. This deduction allows you pay less in taxes on your winnings, nothing more.

You cannot just file your losses only. If the government allows this, it’s subsidizing gambling.

Charitable contributions

Did you donate to a good cause this past year? How about church? Did you give away clothes to a thrift store? The value of your contributions is tax deductible.

Healthcare

The IRS lets you deduct medical costs on your tax return if they are more than 10% of your adjusted gross income. There are numerous eligible deductions in this category.

  • Expenses incurred while traveling to treatment can be deducted.
  • Costs of alcohol- or drug-abuse treatments can be deducted.
  • If you spend money going to a conference about a medical condition that affects you, a spouse, or a dependent, you can deduct the cost of admission and transportation.
  • If you’re self-employed and pay for your own health and dental insurances you can deduct this expense.

Student loans postmates tax deductions

Student loans

Interest paid in a given year on loans borrowed for college are tax deductible, up to $2,500. Of course, the lender has to be a qualified one. You wouldn’t be able to deduct interest paid to your parents if you borrowed money from them for college. Your income cannot exceed $80,000 a year to take advantage of this deduction. You can’t deduct the maximum $2,500 if your income is between $65,000 and $80,000—only if you make less than $65,000.

Expenses while job searching

If you incur expenses while searching for a job, your expenses for job hunting can be deductible.

Expenses like travel costs, resume printing, etc. can be deducted. However, there are a lot of conditions to be met according to the IRS website. Too many to list here. Check out the link if you plan on using this deduction.

Investment losses

Did you invest in stocks and lost money for the year? You can deduct this.

Earned Income Tax Credit (EITC)

A lot of people miss out on this deduction every year. And it’s a big one. This is a benefit for workers who have low to moderate income. To claim it, you must qualify by meeting all of these following requirements:

  • SSN that is valid for employment.
  • Earned income by working for someone else or owning a farm or business
  • Your filing status cannot be married filing separately
  • Must be a U.S. citizen or resident alien all year
  • You cannot be a qualifying child of another person
  • You cannot file Form 2555 or Form 2555 EZ. These forms are used for income earned while abroad.
  • Must meet the earned income, adjusted gross income, and investment income limits (income limits change each year, see the chart below)
  • And you must meet one of the following:
    • Have a qualifying child
    • If you do not have a qualifying child, you must:
      • be age 25 but under 65 at the end of the year,
      • live in the United States for more than half the year, and
      • not qualify as a dependent of another person.

If you are eligible for EITC, you have to file a tax return with the IRS, even if you owe no tax or are not required to submit a return.

Earned Income Tax credit postmates

The maximum amount of credit for Tax Year 2016 is:

  • $6,269 with three or more qualifying children
  • $5,572 with two qualifying children
  • $3,373 with one qualifying child
  • $506 with no qualifying children

Conclusion

My old football coach used to say two things are certain in life: death and taxes.

You can’t do anything about the first one, but you can try to pay as little taxes as possible.

The United States’ tax code is very complicated and often time people miss out on potential tax deductions. Take your time filing for your return. Make sure you find all the deductions you’re eligible for.

Leave a Reply

This site uses Akismet to reduce spam. Learn how your comment data is processed.