New Report Finds 40% of 1099 Workers Do Not Have Enough Money to Pay Their 2021 Taxes
SAN FRANCISCO, April 12, 2022 (Newswire.com) - The Independent Economy Council has released findings from its new report, the State of Taxes in the Independent Economy 2022.
On March 14, 2022, 1,003 U.S. individuals were surveyed who earn the majority of their income from independent work, including freelance work, gig work, on-call work, or anything else considered to be 1099 income.
Commenting on the findings, Trent Bigelow, co-founder and CEO of Abound said: "There are 68 million independent workers in the U.S. alone and that number is only going to increase in the coming years. We must provide these workers with the financial infrastructure that W-2 employees have access to today. This is about building the future that independent workers want to work in."
Key Findings:
- 47% aren't setting aside income every month for their taxes. Because taxes are not withheld from their paychecks, independent workers must calculate the estimated tax owed on their income, and set aside a portion from each payout or paid invoice to pay that tax — but about half aren't setting aside those funds.
- 49% say they don't pay their quarterly estimated tax payments. To pay taxes that are owed and to avoid penalty, independent workers should pay estimated taxes quarterly (if expected taxes due will be $1,000 or more). Half, however, are not doing so because they don't know the process, or decide to wait and file yearly, incurring the penalty.
- 46% of independent workers worry they'll be audited. Because the process of filing taxes is complex, time-consuming, and requires good record-keeping, independent workers fear getting audited for making a simple mistake.
- 18% haven't started their 2021 tax filing — and don't expect to have it done by the deadline. Even though tax time comes each April, 18% of our respondents don't expect to meet the April 18 deadline (our survey was conducted one month before the deadline). That translates into nearly 12.5 million independent workers failing to file on time.
- 40% won't be able to pay their taxes. Over one-third of respondents don't believe they'll be able to meet their tax obligations this year because of a lack of funds.
- 63% are concerned they'll owe more than they thought. Their biggest concern is that because the process is confusing, they've made a mistake in their estimates, resulting in a higher tax bill than anticipated.
- More independent workers are turning to professionals. Compared to last year, more independent workers are turning to online services like TurboTax or H&R Block or hiring professionals, and away from doing their taxes themselves, or having friends or family do it for them.
To download a full copy of the report, click HERE.
About Independent Economy Council
The Independent Economy Council was founded in 2021 by a community of workers, advocates, entrepreneurs, and researchers in order to increase economic security for American workers by making independent work more viable for everyone.
In light of the rapid growth of the Independent Economy, the Council advocates for public policy and industry guidance that align economic success and security for America's 68 million independent workers, as well as those who serve and pay them.
To find out more about The Independent Economy Council, visit www.independenteconomy.org.
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Source: Independent Economy Council