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Liz Weston

What gig workers need to know about taxes

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If you became a gig worker during the pandemic, beware: Your taxes just got more complicated.

Gig work — Uber driving, Instacart shopping, Amazon Flex delivery and so on — is on-demand, freelance work that’s typically taxed as self-employment. Instead of having an employer withhold money from your paycheck, you’re an independent contractor who is expected to pay taxes on your gig income as you earn it. You’ll also owe a larger share of your pay to Social Security and Medicare taxes.

On the plus side, you may have more opportunities to deduct your expenses and save for retirement than you do as a W-2 employee.

In my latest for the Associated Press, unraveling the mysteries of gig worker taxes.

Tuesday’s need-to-know money news

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Today’s top story: How to get your savings resolution back on track. Also in the news: Where to look if your small business can’t get a PPP loan, breaking down the tax implications of PPP loans, and when you might get your $1,400 relief check.

Broke Your Savings Resolution? How to Get Back on Track
It’s not too late.

Where to Look If Your Small Business Can’t Get a PPP Loan
Small-business owners can turn to other SBA loans and grants from state and local agencies and organizations.

Breaking Down the Tax Implications of PPP Loans
Expenses paid with a PPP loan can be deducted on your taxes, even if that loan is forgiven.

When Will You Get Your $1,400 Relief Check?
It’s going to be a few weeks.

Monday’s need-to-know money news

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Today’s top story: Discriminatory practices leave Black Americans with less life insurance. Also in the news: How to keep your student loan payment at $0, a new episode of the Smart Money podcast on the lessons learned from Gamestop, and how to protect yourself from gas pump skimmers.

Discriminatory Practices Leave Black Americans With Less Life Insurance
Years of discrimination have led to a life insurance coverage gap between Black and white Americans.

How to Keep Your Student Loan Payment at $0
Take a look at income-driven repayment.

Smart Money Podcast: GameStop Lessons and Talking About Money With Your Partner
Understanding what the heck happened with Gamestop.

How to Protect Yourself From Gas Pump Skimmers
Scammers never rest.

Q&A: Age minimum for survivor benefits

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Dear Liz: I am 53 and Social Security is giving me a hold time for my widow support. What should I do?

Answer: The only thing you probably can do is wait.

Survivor benefits are normally only available once you turn 60. You can start as early as age 50 if you are disabled or at any age if you are caring for the deceased worker’s minor children.

Q&A: Dementia and financial accounts

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Dear Liz: You recently discussed the importance of adding spouses to financial accounts before one of them dies to make it easier for the surviving spouse. I wholeheartedly agree. I would add that this needs to be done sooner rather than later. If one of the spouses is diagnosed with dementia, the bank will likely not make changes to accounts. People have to be able to understand what they are signing.

Answer: That’s an excellent point. Another important task is to create powers of attorney for healthcare and finances. These allow someone else to make decisions for you if you are incapacitated. Someone in the early stages of dementia could sign such a document if they understand what it is, but otherwise the family might have to go to court to get a conservatorship, which can be an expensive process.

Q&A: Paying down your mortgage

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Dear Liz: You’re not a fan of prepaying student loans in most cases because the extra money sent to lenders is “gone for good” — it’s not like credit cards, where paying down a balance can free up some of the credit line to be used again. But what’s wrong with paying down a primary mortgage? That can create more equity that people could borrow against.

Answer: Perhaps. To tap that equity without selling the home, though, you need a lender’s cooperation, which isn’t always forthcoming when you’re experiencing a financial emergency. If you lose your job, for example, a lender may be reluctant to offer you a cash-out refinance or allow you to establish or expand a home equity line of credit.

Contrast that with paying down a credit card, which typically opens up available credit as soon as the transaction is processed. That’s not guaranteed, of course, because lenders can lower credit limits or even close accounts if your credit scores drop or if bad economic times make lenders more cautious. But for the most part, credit cards are a much more flexible and accessible source of credit than mortgages.

That’s not to say you should never make extra payments on a mortgage. If you’re on track with saving for retirement, you’ve paid off higher rate debt and you have a sufficient emergency fund, then prepaying a mortgage can make sense.