Category: Make Money

How to Turn Your Side Gig into a Tax Cut

If you?re making money with a side gig, I have bad news and good news for you. The bad news: You have to pay taxes on that extra cash. The good news: With some creative (and legal) accounting, you might be able to turn that side gig income into a tax cut? or at least seriously reduce any tax you might owe on it.

Two tax options for side gig income

Whether you do odd jobs for TaskRabbit, clean up as an Airbnb host, drive for Lyft, or offer freelance services, any cash you pick up gets added to your taxable income. But where and how you report that side money can make a serious difference in the taxes you owe on it.

  1. The IRS?s first choice: Just include it as another line item as ?other income.? That way, there?s nothing to think about, and you pay tax on the full amount.
  2. A better choice for you: Treat your side gig like a business? because it is one. And that means you can deduct all of your ?ordinary and necessary? business expenses ? and put a serious dent in your tax bill.

Depending on the type of side gig(s) you have, you?ll work with either Schedule C (this cover most gigs) or Schedule E (for renting out space). Either way, it pays to keep track of any expenses you rack up in your pursuit of extra income.

Schedule C when you?re the business

Most side gigs fall into Schedule C territory, the form for reporting ?Profit or Loss from a Business.?

Any company you work for has to send you a Form 1099-MISC if you earn at least $600 during the year. If you earn less than that, or don?t get the form for some other reason, you still have to report the income? the IRS fines, penalties, and interest can be pretty steep if you don?t.

Side note: Having more income may not be great for your tax bill, but it is good when you?re trying to rent an apartment or apply for a loan.

Deductible expenses

Now come the deductible expenses ? pretty much anything you paid for to keep the gig going, attract more customers, or offer better service.? You?ll want to deduct every possible penny to shrink that income down for tax purposes. Your expenses have to make business sense for the type of gig you?re doing (like sheet music for a guitar instructor). Here are some examples of common expenses you might not realize you can take:

  • Home office deduction (the square-foot method is super easy)
  • Mileage (for driving to meet customers and other business outings)
  • Business cards
  • Deprecation expense (for any equipment you use)
  • Education (like webinars and e-books)

If you?ve made at least $400 after deducting every expense you can think of, you?ll also complete IRS Schedule SE for self-employment tax (tax apps and programs usually do this automatically).

If you ended up shelling out more for expenses than you brought in, that business loss offsets the rest of your taxable income, lowering this year?s tax bite.

Special tips for Lyft and Uber Drivers

When you drive for a ride-sharing service, you may get two different types of 1099s (IRS forms that report payments) for your work.

A 1099-K covers any payments for driving you got directly from customers.

Form 1099-MISC reports any non-driving income, including things like referral bonuses.

Here?s the tricky part about your 1099-K: The main dollar amount on this form, found in Box 1a, is the total customer payment ? not just the payment you actually got. So you?ll need to include the ride-sharing service?s commissions and fees in with your deductible expenses.

You may also have expenses that other side gigs don?t, such as:

  • Tolls
  • Parking
  • Car wash
  • Car detailing
  • Bottled water and snacks (for customers)
  • Smartphone charges (unless you have a separate phone for this, you can only deduct the business portion)

When it comes to your driving expenses (like gas, repairs, and insurance), you?ll probably make out better using the standard mileage deduction, which is 53.5 cents a mile for 2017. Make sure to keep a mileage log that tracks all of your professional driving, including miles you drove for rides that were cancelled or trips to meet up with inspectors, just in case the IRS asks for proof.

Schedule E for rental gigs

When you?re renting out space in your home for extra money, all of your rental earnings go on Schedule E. And when you rent out property, the list of deductible expenses is pretty long.

The 14-day rule: If you live in the space you?re renting ? like many Airbnb hosts do ? you only have to report your rental income if you that space is rented for 15 days or more during the year. If you only rented it for 14 days, that?s totally tax-free money.

Any expenses directly tied to your rental income are 100% deductible. Those include things like

  • Cleaning services
  • Airbnb (or HomeAway or VRBO) fees
  • Advertising
  • Rental insurance
  • Decorating the rental area
  • Guest towels and linens

Indirect expenses like mortgage interest, property taxes, and utilities have to be allocated between the guest-time and you-time in the house (or by area if you rent out a room or section of your home).

If you lose money on your rental gig, you may be able to deduct those losses against the rest of your income, reducing your overall tax bill.

Should you go to a pro?

If you made a lot of money on your side gig and you?re not sure what you can deduct from that income, consider talking to a CPA ? at least the first year that you?re in business.

Professionals know about deductions that you may not, and they?ll be right by your side if the IRS decides to call you in for an audit.

Plus, every penny you pay the tax pro is a fully deductible business expense. That, along with how much more she can lower your tax bill, makes it an expense that pays for itself.

Michele Cagan is a CPA, author, and financial mentor. With more than 20 years of experience, she offers unique insights into personal financial planning, from breaking out of debt and minimizing taxes to maximizing income and building wealth. Michele has written numerous articles and books about personal finance, investing, and accounting, including The Infographic Guide to Personal Finance, Investing 101, Stock Market 101, and Financial Words You Should Know. In addition to her financial know-how, Michele has a not-so-secret love of painting, Star Wars, and chocolate. She lives in Maryland with her son, dogs, cats, and koi. Get more financial guidance from Michele by visiting

Photo by?Hannah Wei

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The Future of Work and Why It Matters

Automation, gig work and the new economy. Here are the highlights from the Future of Work panel at the Cambridge Associates Impact Investing Conference 2017 in Denver, Colorado.

Automation is already here… and growing

Automation is gearing up to have a massive impact on our economy. According to McKinsey, ?49% of paid activities have the potential to be automated. An estimated?80-100% of all truck driving jobs will be replaced by automation.

The automation momentum is just getting started. According to Andrew Stevenson from JUST Capital:

  • 70% of service sector jobs are at risk
  • 30% of oil and gas jobs will be reduced in 2025
  • In financial services: UBS plans to reduce its workforce from 95K to 65k employees
Just Capital estimates that 66 million U.S. jobs are at risk for automation. Even if only one fourth of that estimate becomes a reality, it means stagnant wage growth. Why? Because of competition for fewer positions.

Keep in mind that wages have already been stagnant for the last 13 years, while housing, education and healthcare costs have grown by double digits. Just one of the effects of this trend: the opioid crisis facing the U.S. is correlated to under-employment and stagnant wages.

Meanwhile, the gig economy might not be all that

Companies are increasingly outsourcing non-core operations. Lower level jobs like janitorial services have been outsourced for some time. What?s different today: higher skilled jobs are now also being converted to gig work at an alarming pace. That includes lawyers, accountants, and financial analysts.

This shift away from corporate employment and toward independent contractors has massive implications for our economy. Here?s why:

  • There is no minimum wage
  • Many independent contract jobs (aka gig work) do not pay as well as corporate jobs do
  • There are no corporate benefits (e.g. healthcare, equity, bonuses)
  • There is no social security
  • It is more difficult to get credit (due to an inconsistent paycheck)

The New Economy: some good news after all

While these macro trends sound bleak, the good news is that we are at the same time experiencing the emergence of the new economy. With it, new types of jobs will be created.

Manufacturing: following market demand

As bad as automation can be for some jobs, it can also be good for others. ?For example, according to Nancy Pfund from DBL Partners, when GM closed their manufacturing plant in northern California in 2010, five thousand jobs evaporated. This had a massive trickle down impact on the local economy.

At the same time this was happening, Tesla was looking for a location for their first manufacturing plant. Many investors urged them to go to China. Investors warned against opening a plant in over-regulated California. But Tesla had a different vision. They wanted their manufacturing to be close to their headquarters in Silicon Valley. And they wanted to keep the jobs in the U.S. So they worked with sustainable investors and the local government to retro-fit the old GM plant. The result: 10,000 jobs were created.

Think about that impact. 5,000 jobs were lost but 10,000 new jobs were created. This happened because Tesla filled a need in the marketplace and consumers made their voice heard. Those 10,000 jobs could have gone to China. Instead, you now have Silicon Valley employees working hand-in-hand with employees from Freemont, CA and Sparks, NV.

This does not need to be a red state / blue state issue. This is about working together to address a new market need and create new jobs in the U.S.

Impact investors will have an important role to play in the new economy. The smartest impact investors will address social cycles that have unmet needs. The GM plant was going away. There was no demand for that product. The new demand was for Tesla. As investors, we can help these companies succeed.

Farming: disrupting the old guard

The global food system, including agriculture, fertilizer manufacturing, and food storage and packaging, accounts for over 25% of green-house gas emissions. Some of the largest companies, like John Deer, Monstano and ConAgra, were formed in the late 19th?and early 20th centuries. (19th century!).?This is a sector that is ripe for disruption.

There are innovative companies that are paving a new future by addressing uneven access to automation.

There is a company called Farmers Business Network, for example, that is bringing transparency and insight to the true value creators: the farmers. Years ago, transponders and sensors were placed on tractors and seed equipment so that seed growers and other suppliers could monitor demand. Not only was this data kept from the farmers, it was used against them. The result: some farmers were paying 30% more for seeds than were the farmers down the road.

Farmers Business Network aggregates and anonymizes data, then gives this data back to farmers so that they can better manage their costs.

This is a great example of using automation to develop a platform company that disrupts the data holders and brings more transparency to the market.? By removing the middlemen, they have democratized the data and made the entire process more efficient.

Coding: the next big blue collar job

There are 530,000 unfilled coding jobs in the U.S. This number is expected to grow to 1.4 million by 2020. That?s right. Not even outsourcing can keep pace. What?s more, offshore outsourcing is now becoming more expensive.

Innovative companies are addressing the need head-on and giving back to the community at the same time.?Techtonic Group, a full stack development consultancy in Boulder, Colorado, was once a committed offshore outsourcer. A few years ago, they made the decision to develop local talent instead. They are transforming lives in the process.

Techtonic was given the first ever the government-recognized technology apprenticeship program in Colorado. They provide underprivileged youth, minorities and veterans technical training and mentorship to become entry-level software engineers.? These candidates get paid to learn to code as part of the apprenticeship program. They are then placed on real client projects and land jobs earning $65,000 – $85,000 per year. Conscious capitalism is part of their DNA. They are addressing a need while at the same time doing good things for our community. CEO Heather Terenzio believes it?s time to invest in local resources. Time for code to replace coal.

Why the future of work matters

Here are a few big world questions to think about:

  • If we automate away millions of jobs, who will buy all the stuff that companies produce?
  • If we don?t train our population for the skills of the future, what will happen to these communities?
  • If we allow the heroin epidemic to go unchecked, what impact will it have on us all?

These problems will come to everyone?s front door one way or another. Think about the increased need for public services alone (police, healthcare, food stamps, housing assistance). ?Solving these problems before they snowball isn?t just the right thing to do, it?s the smart money thing to do.

What you can do to protect your financial future

There are things you and your family can do to prepare for the new economy. In fact, each one of us can help address the big world challenges in a way that will also make us more financially and physically secure. Here are a few strategies:

  • Invest in yourself. The new economy is coming. Don?t be left behind. Invest in learning a new skill like software coding. If you don?t have the money to pay for a coding bootcamp, there are other options. Check out how this unique company is using an old-world apprenticeship model to train works for the new economy. That?s right, you can get paid to learn to code.
  • Invest in your financial future while solving big world problems at the same time. You can now become an active impact investor without shelling out big institutional money. It used to be that you had to have $2,500, $5,000 or even $100,000 to get into impact investing. Not anymore. There are consumer platforms and low-cost investment vehicles that let you make an impact for as little as $50. These are investments, not charity. That?s beneficial for you as an individual and the world.
  • Don?t live beyond your means. Yes, we realize this obvious. But the reality is that many of us forget. And that?s ok. We just need to keep reminding ourselves that there are only two levers: money coming in and money going out. If you increase the former and decrease the latter, you will set yourself up for a brighter financial future. Check out more good money ideas for earning, spending and saving.
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How To Convince Your Company To Create A Wellness Program

Why Wellness Programs Matter

You are your company’s backbone. As an employee, you drive revenue, solve problems, and make money. You aren’t just a drone who sits in an office cubicle all day. You are a real person with a family and a personal life outside of work.

Sometimes, life happens and you may not be as on top of things at work as you used to be. That doesn?t mean you’ve lost your touch or that you’re no longer valuable. Your company can help you get back on track.

About 70% of companies offer Employee Assistance and Employee Wellness programs. Employee Assistance Programs help employees get back on track after their job performance drops, while Employee Wellness Programs prevent performance drops. But these perks aren’t just great for employees. Companies who invest in these programs also benefit from:

  • Reduced long term insurance costs
  • Decreased absenteeism
  • Increased employee retention

Companies like Johnson & Johnson, Google, and IBM not only take these kinds of programs seriously, they also see significant returns on their investments from these programs.

Benefits To The Company

If you’re looking to convince your company to implement a wellness program, make it about them. Outline the benefits to the company.

Lower Costs

Over 10 years, Johnson & Johnson saved about $250 million from reduced healthcare spending and reduced employee absenteeism.

Johnson & Johnson has a comprehensive employee wellness program that focuses on physical health. They?ve implemented programs that have helped employees quit smoking and others that connect their employees to mental health professionals. Their health profile program also scores employees on key health metrics and offers guidance to improve physical health. Not only did employees improve their health, Johnson & Johnson also got $2.57 back for every dollar they spent on these wellness programs. Over 10 years, Johnson & Johnson saved about $250 million from reduced healthcare spending alone. The more comprehensive your company’s insurance plan is, the more they could potentially save from taking an active role in improving their employees’ health.

Increased Customer Satisfaction

“At Virgin Pulse, we have shown positive impact on business and talent concerns like absence, safety, performance and productivity, turnover, and even customer quality and customer satisfaction.” – Virgin Pulse

Richard Branson has famously said that employees come first and customers come second. He understands the importance of investing in employee wellness. Virgin America includes standard benefits like health insurance, retirement planning, and flexible working hours. Sure, these are great, but they also help with student loans, flexible working hours, and wellness programs for employees and their families. That’s going above and beyond for employees, but what does that have to do with customers?

In survey of over 1,000 HR professionals, over 50% of companies who invested in employee engagement programs increased customer satisfaction. Read that again. Companies who made their employees happy also made their customers happy. Happy employees are willing to go above and beyond for the customers that they serve. If your company wants its customers to fall in love with them (and they do), convince them to invest in you.

Increased Employee Loyalty

About 40% of generation X and Y employees cite strong benefits as “extremely important” in creating loyalty to an employer.

IBM is known for its presence in hardware and technology, but what isn’t common knowledge is the robustness of its employee assistance program. IBM?s Employee Assistance Program includes counseling for not only its employees, but also for its employees? family members. It?s work-life balance program, Lifeworks, gives employees counseling about how to manage time, organize their lives to achieve their optimal work-life balances, and even help families with the adoption process. Their website outlines its “competitive benefits program” and encourages potential new-hires to explore IBM’s benefits.

But what does IBM get out of giving its employees so much? Loyalty. The most loyal employees tend to be the ones with strong benefits packages. About 40% of Generation X and Y employees cite strong benefits as “extremely important” in creating loyalty to an employer. Training new employees is expensive, and your company would love to keep you as long as they can.

Before You Make Your Case

To summarize, small changes in a company can make you feel more motivated and engaged at work. In return, employers will benefit from:

  • Saving money
  • Delighting customers
  • Retaining talent

Your company wants all of these perks. Think of the benefits that are most important to you, then make your case. What changes would help you thrive in your job? Things like flexible work hours aren’t super expensive strategies for many companies to offer. If you want more perks, remind them that investing in employee health isn?t just for massive tech companies. It?s good business.

Before you ask, make sure you’re proving yourself to your firm.? This will give you more leverage when you make the request.

What does your employer do to take care of its employees? What kind of wellness and assistance programs do your company have?

Photo by Climate KIC

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The Truth About Retirement In The Gig Economy

Years Of Roller Coaster Cash Flow…

Thinking about money gives me heart palpitations. As a small business owner in a creative field, my focus has always been squarely on my work and my clients. I send invoices off at lightening speed so I can get back to the real work.

Small business owners, freelancers, gig economy worker bees: we have all purchased tickets to ride a financial roller coaster. Money comes and goes in unpredictable waves. It?s easy to think things will always be sunny when you?re riding high on cash flow. But I?ve had enough down cycles over the past 15 years to know I can?t get comfortable.

The elephant in the room for me is retirement. For years I reinvested profits into the business, figuring I could save for retirement at some future date. When my industry, along with every other, took a nosedive in 2008, I was forced to dip into my savings. Fast forward 9 years and I?ve managed to make the business profitable again, purchase a nice apartment and maintain a comfortable standard of living.

But I have saved little for retirement.

Looking back, I wish I’d set up an automatic withdrawal and investment account, even if the contributions would’ve been small. Compound interest would have been nice.

“Compound interest is the eight wonder of the world. He who understands it, earns it…..he who doesn’t….pays it. Compound interest is the most powerful force in the universe.” -Albert Einstein

… Means Playing Catch-up For Retirement

I am now having to play catch up and it doesn’t look pretty. A peek at a retirement calculator confirmed my fears.??The good news is, I’m putting my retirement decisions on a fast track.?A few years ago I opened an IRA account and because I cannot contribute more than $5,500 per year, I decided to invest aggressively by purchasing mostly technology stocks. So far that account is up a whopping 30%. It isn’t a lot of money and that’s the only reason I feel safe taking such a risk.

Next, I opened a SEP account through my business (something I should have done ages ago) and opted for a more balanced portfolio made up of low cost?ETFs. I am contributing the maximum allowable each year, which in my case is about $20,000. These are pre-tax dollars and I am counting on that compounding interest to help reach my retirement goals.?This plan has certainly curtailed my bottom line, which means I’ve had to cut back on my expensive sushi and sake habit. But I feel safer knowing the money is working for me.

When You’re Building A Business, It’s Hard To Save

When you’re busy building a business from the grown up retirement is the last thing on your mind. As free agents it is hard enough to keep track of all the tax liabilities, let alone a retirement account. It seems almost trivial. But time flies when you’re having fun and before you know it, your friend who’s been doing the corporate grind for 15 years suddenly has a nice nest egg and you have…..nothing.? I’ve had to re-calibrate the way I think about spending.

I used to pay my business expenses, taxes and living expenses, in that order. Whatever was left over was reinvested into the business. Now, after paying business expenses and taxes, I pay my retirement accounts. There is less money to reinvest in the business and less money for living expenses.

Predictably, this has made me a more careful and mindful consumer. If there is a piece of equipment that needs upgrading, I will purchase used instead of new. I have lowered my overhead by consolidating staff while taking on more work myself. I cook more meals at home and Trader Joe’s is my new Whole Foods. Living a bit more frugally has proven to be less stressful than I anticipated.

What Finally Helped

The anxiety of planning for retirement largely came from the worry that I might not be able to keep up with monthly or yearly contributions in a consistent manner. So I simply didn’t deal with it. What finally worked for me was?automating my retirement contributions. I made them realistic. I made them a fixed line item, like my monthly mortgage. Once I did that, I had no choice but to pay into the accounts.

Practically everyone is familiar with Warren Buffet’s ‘pay yourself first’ principle. When you are running a business, simply keeping it afloat seems like a tremendous accomplishment. Moreover, many of us believe our small businesses will in fact be part of our retirement plan. Unfortunately there seem to be fewer guarantees about the long term viability of any given small business these days. Industries, especially creative ones, are changing so rapidly, it is impossible to predict the value of an asset 20 years from now.

Although I’m more than a little late to the party, saving for retirement using traditional investment vehicles has paradoxically forced me to streamline my business and perhaps better prepare it for that uncertain future.

Darla Roost is a pen name for a gig economy creative professional thriving in New York City. Her dream is to share her stories and create a place where people can share theirs, too.?Photo by?Bonnie Kittle

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$20 Off Your Power Bill By Switching To CLEAN Energy (without solar panels)

Have you always wanted to support clean energy but couldn’t because of rent or pricey solar panels?

Now you can direct your power bill to use clean energy. This is a free service. It takes 5 minutes to set up, and it gives you $20 off your next power bill.

Solar panels aren?t a viable option for everyone. Some people live in buildings that don’t allow solar panels. The price of the solar panels may also be a deterrent. Now you can change your power bill to a clean energy bill, without solar panels.

If you?re paying an electric bill, Arcadia Power can switch your bill to clean energy.

Here?s how they do it.

How Arcadia switches your power bill to use clean energy

Arcadia Power buys Renewable Energy Credits (RECs) from national wind farms and pays the utility companies on your behalf for your energy usage. The process is very easy to set up and only takes 5 minutes.

  1. Set up an account with Arcadia Power.
  2. Direct Arcadia Power to take over payment of your energy bill by linking your utility account.
  3. You pay Arcadia and Arcadia pays the utility bill and matches your usage with Renewable Energy Credits (RECs).
  4. All of this is managed on the platform.
  5. What it costs: Free plan: switch 50% of your energy bill to clean energy. Meaning: you just continue to pay what you would have paid for your power usage. Alternatively, there?s the Premium plan: switch 100% of your power bill to renewable energy for $0.015 per kilowatt hour (that comes out to $5 – $20/month more depending on your energy usage).
  6. Arcadia gives you a nice dashboard showing your energy consumption and how much came from traditional v. renewable energy. We liked this dashboard because it helped us become more conscious of our energy usage (e.g. turning off the lights when you walk out of a room).
  7. Once you?ve set up your account, you get $20 off your next energy bill.
  8. That?s it. 5 minutes to do some good in the world and save yourself 20 bucks.

Why is this so easy?

The availability of RECs, Arcadia?s network of wind farm partners, and Arcadia?s ability to pay your utility company on your behalf makes this whole thing possible.

Here?s how RECs work. Renewable energy has two components: the physical electrons and the corresponding Renewable Energy Certificates that track clean energy production. Think of RECs as the currency of the renewable energy market.

When electricity from a wind farm is produced, it is fed into the grid. Once it?s in the grid, there is no way to distinguish clean energy electrons from any other type of energy (nuclear, fossil fuel, etc.). That?s where RECs come in. RECs track how much energy was sent by the wind farm to the grid. Once a REC is used for payment, it cannot be re-used.

When you direct Arcadia to pay your power bill on your behalf, and by matching your usage with RECs, you are helping drive up demand for renewable energy. This is helping our world, and it only takes 5 minutes.

We tried it!

We switched our energy to Arcadia Power. Here?s the actual process.

Step 1: ?enter your email and land on their dashboard

?Pretty straight forward. After you enter your email, you’ll be taken to their dashboard. After you go through the process, this dashboard will show your traditional energy usage v. renewable (aka clean) energy usage.


Step2: Link your utility account.

Select your state and your utility company. Easy. Once you link your account on Arcadia’s secure system, they’ll monitor your current and historical energy usage.



Step 3: Select a membership.

There are two options.

FREE PLAN: Arcadia pays 50% of your power usage with renewable energy credits (this costs you nothing extra ? just pay your power bill as you normally would). You also get a few other freebies like Price Alerts and the Dashboard.

PREMIUM PLAN: Switch your entire energy bill to renewable energy. This is $0.15 per kilowatt hour more. That?s about $5 – $20 more per month added to your power bill, depending on how much power you use. Start or stop anytime. There are no contracts.

Step 4: DONE!

Congrats. They get your account set up with the utility and send you a confirmation email. That’s it.




Now it?s your turn to use your power as a consumer. Take a few minutes to make this important change and save yourself $20 on your next power bill.

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