In Australia my employer reports my income and does all the tax before I get paid. Then at tax time I go to the Aus tax office website; review it, add any claims I want to make and submit it.
This is an American solution to an American problem.
Yup. Especially because the IRS knows how much most of us are making. (If you're not completely in cash in the black market the IRS knows.) Your employer reports your earnings to the IRS.
Incredibly we have this system because the private tax preparation business has lobbied to make it hard to pay your taxes.
That's basically how it works here too. The situation in op is different because there's no employer.
Uhh what? There's no American tax website to login into to "verify" things were handled right. One still has to do a decent amount of work copying data into third party for-profit company web forms.
While it's easy for some to manage, it's by no means a simple process compared to what some other countries offer
There’s no American tax website to login into to “verify” things were handled right
There basically is. Your W2 gives you all the info about how much was withheld, and you can simply verify that it's right or not.
If you drive with Uber or something similar in Australia, I’m pretty sure you will be classified as self employed. I doubt Uber is your “employer”
Eh, as a rideshare driver you have a code conduct, rules about how to give rides, a dress code, a vehicle requirement (age, cleanliness, paint color, etc), and an agreement to be exclusive. (Yes all of those multi app drivers are breaking the rules.)
Just having the ultimate flex schedule isn't really enough to say you're independent.
Are you absolutely sure rage the Uber driver comtract requires exclusivity in Australia? That would five substantially different to the other countries it operates in - and I would expect that any such requirement would lead the tax authorities to put them squarely in the ‘employer’ category
Huh, TIL that there are countries that tech companies actually follow the laws in? In the US, they just do whatever they want.
I'm jealous.
Seems like they follow the law as voted for https://www.bbc.co.uk/news/business-64947695#
The law that Uber voted for yes. Drivers were extremely against it but Uber and Lyft have marketing budgets that drivers don't.
The thing is, just by existing law before that they should be employees. The only thing they actually get towards independence is the ultimate flex hours. Which isn't enough to be an independent contractor in any other industry. By federal law gig workers should be employees. But the government is bought and paid for. So Uber and Lyft and Amazon and UPS and FEDEX and the trucking industry all get to pretend their drivers aren't employees.
It could be worse, at least Uber and Lyft don't require you to buy the vehicle from them and they largely look the other way if you take rides from the other one. Trucking is far worse.
Your completely correct but Google also tells me that, at least in the case of Uber, it will calculate the tax for the ride and you just have to report it to the government at the end of the month. Also there are some really cheap accountants you can use over here and I'm sure they exist overseas as well, but I suppose I don't know OP's financial situation and neither of these are free.
This is a profoundly American problem op. The rest of the world does not have these issues. Contact you're representatives and ask them why this is the only place in the world that has this issue.
Contact you're representatives and ask them why this is the only place in the world that has this issue.
Because the tax prep software companies ~~bribe~~ lobby Congress to keep things the way they are.
It’s not the tax prep companies in this case. It’s companies like Uber spending millions on lobbying to ensure that their drivers are never considered their employees, and subject to protections that employment affords
It's actually both. TurboTax spends millions lobbying against simplicity in the tax return process. While Uber also spends millions lobbying against proper labor practices.
Canada also works similarly
As an American who moved to Canada, there are similarities but Canada is still one million times better than the US.
The CRA (Canadian IRS) allows digital access to all tax info. Whatever software or service you use, just log into your CRA account and everything auto-fills. Done in a few minutes. My US taxes have never taken less than an hour, and often multiple hours if there’s anything remotely complicated.
I'm not denying that, but things are still shitty here compared to the country I come from because of the same reasons: lobbyism (by the same companies, even!)
Canada also works similarly
Our neighbour is a bad influence on us when it comes to things like business practices.
Use freetaxusa. It's actually free. I haven't used it as an independent contractor, but it has worked well for my complicated finances.
I just switched last year and it worked great. I had like 4 other family members file as well through them without issue.
I did it with independent contractor stuff along with my normal job. Site supported both. I think the independent contractor form was like 1090 or 1099 or something? Can't fully remember.
A 1099 is what you receive from the company that you perform independent contractor services on behalf of in order to report your taxes to the IRS on your 1040 and Schedule C
I think if you have to file state taxes there is sometimes a small fee, but it's incredibly minimal. For federal taxes it is 100% completely and totally free and I use it each year.
Something people don't tell you is you can file federal and state taxes at completely different places (they're 100% separate anyway so it really doesn't matter). I did this one year using freetaxusa for federal, and some other tax software that did state for free but charged for federal.
This next year though I'm hiring a CPA because my shit has become complicated.
Second this. It is free for federal, and iirc $15 for state. Also, you can upload submissions from Turbotax if you used them before so many fields will be pre-filled out. I actually preferred the freetaxusa experience to turbotax having used both.
i assume other countries do this too
France has flaws, but this isn't one of them
The tax app nonsense is uniquely American, in many ways.
Try IRS free fillable forms.
A bit of a hassle to learn at the start, but you actually learn how to do the taxes yourself, and it's 100% free.
"contractor" yeah. its a very nice loophole they love to abuse. prevent them from having to care about any benefits also.
The IRS has set up instructions on how to do the paperwork yourself. You are fully capable of reading and following directions. If you really don't want to pay the software, then file for yourself.
Your response is tone deaf. The American tax code is intentionally complicated to protect tax filing companies and to allow the rich to take advantage of loop holes. I can't believe how housebroken some people are that they defend the shitty tax system instead of sharing in OP's anger.
I mean yeah the tax system sucks, but a single 1099 isn’t complicated to fill out
Yes, our system is all fucked up. Yes, the IRS gives instructions to follow. Can't follow directions?
Also, I heard the IRS has just released new software to make it even easier? Anyone know more?
Can't follow directions?
What is this, tax advice from Stack Overflow? I don't understand why people like you don't save your criticism for the system, instead of at the people using the system.
Yes, the system is fucked up... because the instructions are intentionally designed to be complicated to follow. I don't know a single person stupid enough to waste their time doing their own taxes by following the directions on the IRS documentation. Horrible advice. Not even professional tax accountants do that.
The IRS free tax-filing service is in limited trial in a few states, eligible only to simple returns within limited income ranges. Most people, including 1099 people like OP, can't use it.
you're fully capable of leaving a sensibly sympathetic reply, and yet here we are
I am assuming you are dealing with 1099 income. As someone who had that 15+ years ago and didn't understand some things, I really hope you understood while earning that you have to pay both your portion of Social Security, and your "employer" would pay since you are your employer (even tho it's BS in this case). I didn't and owed a huge amount of money. Over US$3k. And I was making $10/hr so that was a lot. I had to get another job to pay it. I hope you'll be ok and are happy with what you do!
Nope. Not a thing over here.
It’s just a 1099, if you don’t want to use tax prep software don’t? Learn to do the paperwork yourself. If you’re smart, you’ll deduct all of your mileage, clothing expenses, ‘business related meals’, etc.
Also any healthcare expenses. When I worked 1099, I actually paid LESS in taxes than I do now.
Yeah, I'm 1099 and the standard deduction for a married person is 24k. I get as squirrelly as I can with my deductions and still usually don't get close. Obviously some things are schedule A versus C or whatever, but I'm not sure I pay less than someone who grosses what I do but as a W2. I take the hit on FICA, since I don't get to split that with an employer. I've been doing it going on 16 years and so my W2 days are hazy, but I've never been convinced I'm somehow paying less. Maybe the benefit I get is when I get a new chair to sit at my PC, I write it off, bt they didn't mean I get $500 back.
Being an independent contractor has benefits. One of those benefits is having your own schedule.
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