As we turn the calendar to the new year, the excitement of the holidays quickly moves to the stress and anxiety of tax filing season. It's a universally shared stress. Every working American—whether full-time, part-time, hourly, shift worker, self-employed, or gig worker—must pay taxes to the Internal Revenue Service (IRS) and, in most cases, file a tax return.
When Is Tax Season?
Tax filing season runs from the last week of January, when the IRS starts accepting tax returns, to the final day to file, which in 2023 is Tuesday, April 18.
Filing your annual tax return can get complicated quickly. Typical life events such as getting married, having a child, buying or selling a house, and changing jobs can impact your return. The type of worker you are—either a W-2 worker or a 1099 worker—also affects the complexity of your tax return.
W-2 or 1099: What's the Difference?
If you're a W-2 employee, your employer automatically deducts taxes from each paycheck and pays the IRS on your behalf, which is easy and convenient and minimizes the risk of underpaying your taxes—and being hit with a big tax bill when you file your return.
For 1099 workers, taxes aren't taken out of their earnings. 1099 workers must calculate the tax they owe and make quarterly estimated tax payments to the IRS. To further complicate things, 1099 workers owe more tax than W-2 employees due to the self-employment tax, which must also be estimated and paid quarterly.
How does a 1099 work? At the end of the year, 1099 workers receive a 1099-NEC form from every organization where they do contract work. Income information from all 1099-NEC forms must be included on their tax returns, along with how much they paid in estimated taxes.
Healthcare shift workers that perform 1099 contract work at multiple facilities must keep track of—and sometimes track down—all their 1099s to include on their tax returns.
Tips for a Stress-Free Tax Filing Season
Minimizing tax season stress starts with following the Boy Scout motto—be prepared. Here are three tips to help you prepare for filing your taxes:
1. Itemize or Standard Deduction?
Reducing the amount of tax you owe is done through deductions. There are two ways to claim deductions on your tax return—taking the standard deduction or itemizing.
Your standard deduction is determined based on several factors, including your filing status (single, married filing jointly, etc.), age, and other special circumstances.
But if you have allowable deductions higher than your standard deduction, it makes sense to file an itemized tax return. Allowable deductions include mortgage interest and insurance, medical expenses, and personal property taxes.
While 90% of Americans take the standard deduction, it's important to do the math to determine if itemizing will save you money.
2. Collect and Organize Paperwork
It's extremely beneficial to have all your paperwork in one place when you file your taxes. Things you'll need include:
Your tax return from last year.
Your W-2 and/or 1099 income information. (You could receive a 1099 for contract work, IRA or pension distributions, unemployment benefits, state or local tax refunds, or the sale of a property.)
Your interest income statements.
Additional income information, including alimony, rental property income, and social security benefits.
Any information that reflects adjustments made to your income, including IRA contributions, student loan interest payments, and self-employed health insurance payments.
Taxes you've paid, which are reflected on your W-2 Form. 1099 workers should have the amount paid in quarterly estimated taxes.
You'll also need the social security numbers and birth dates of anyone included on your tax return.
If you itemize deductions, you'll need to gather additional information, including mortgage interest and insurance payments, child care costs, charitable donations, and medical expenses.
When do I get my W-2 from work? Federal law requires employers to mail or electronically distribute all W-2 Forms by January 31.
3. Create an IRS.gov Account
Regardless if you use a third-party tax service or submit your taxes yourself, creating an account with the IRS by going to IRS.gov/account is important. Once you create an account, you can see your tax history, access previous tax records, make payments or apply for a payment plan, download helpful filing documents, and check your refund status.
Simplify Tax Time as a W-2 Healthcare Worker
Healthcare shift workers can simplify tax time and reduce tax season stress by becoming a W-2 employee of ShiftMed, which connects CNAs, STNAs, GNAs, LPNs, and RNs with nearby per diem shifts or permanent positions at short-staffed facilities through the ShiftMed app.
As a ShiftMed W-2 employee, you won't have to send invoices and track down payments and 1099s from each facility where you worked over the year. ShiftMed collects taxes and sends them to the IRS on your behalf. It's one less thing for you to worry about.
Disclaimer: ShiftMed does not provide legal, accounting, or tax advice. This content is for informational purposes only and is not intended to provide legal, accounting, or tax advice. Please refer to a professional advisor prior to acting on the information set forth herein.
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