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Side Gig Hustle-Taxes

A recent report from the Federal Reserve Board found that three in ten American adults are working in the "gig economy" - typically as a way to pick up more money. . Now, it may make good tax sense for even more taxpayers to have a side hustle.

As part of tax reform, tax-favored provisions could potentially be eliminated. Specifically, un-reimbursed job expenses and miscellaneous deductions subject to the 2% floor previously reported on a Schedule A, Itemized Deductions, may no  longer available for the tax years 2018 through 2025. Those expenses include those that are potentially incurred doing a job such as tools and supplies and job search expenses. They also include un-reimbursed travel and mileage, as well as the home office deduction.

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How does an IC get financing?

The workforce has changed rapidly in the last several years. Nearly one third of workers now identify as independent contractors. Unfortunately, this gig economy trend doesn’t make it any easier for freelancers to land a mortgage or a car loan. The nine-to-fiver with a regular paycheck stub still has a much smoother time. But that doesn’t mean you’re out of luck. With a little legwork and planning, independent contractors can prove their worthiness to lenders and snag the keys to a new home or set of wheels.

Build your work history For a mortgage, many lenders will require freelancers to show proof of a steady stream of income from their business that dates back at least two years, so it helps if you wait to shop for a home loan until you’ve been freelancing for a while. Some mortgage lenders will give leeway for independent contractors who’ve left full-time jobs to freelance in the same industry—as long as they can prove they have a stash of regular clients. There might be a little more wiggle room when seeking a car loan, but you could pay a higher interest rate than someone who rakes in a full-time salary.

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