US Expat Tax Advice for American Gig Workers Abroad

‘’Gig’’ in the dictionary can be described as a single professional engagement – a job of short or uncertain duration. For American gig workers abroad, performing gigs are becoming more well-known and common in the expat world, so here is some US expat tax advice.

Whether you’re a US citizen abroad selling homemade jewelry on Etsy, or taking on temporary partnerships through Instagram for example, you’re involved in the gig world. Most especially, you as an American abroad are responsible for keeping track of your expenses and filing your worldwide income earnings to the IRS every year.

Most notably, in January of this year, the IRS launched a new tax center for the Gig Economy. This center offers a variety of resources about tax implications for both the individuals who perform the services and the companies that provide the services for them.

IRS Commissioner Chuck Rettig said: “Whether renting out a spare bedroom or providing car rides, we want people to understand the rules so they can stay compliant with their taxes and avoid surprises down the line.”

In this post we’re going to share some tax advice you need for Americans abroad working in the gig economy:

What is Gig Economy?

The ‘’gig economy’’ is known as the access or on-demand way of making money. These usually include businesses that run through a website or app, and connect people to provide services to customers.

The gig economy is also known as the “sharing economy” because people earn income by providing on-demand services or work. See it as an Uber driver – this is the perfect example of someone working in the gig economy. The Uber driver is making income by giving rides to people who need to go from point A to point B from an app, run by an online business.

What is Gig Work?

Specifically, gig work is an activity you do to make an income, which often is through a digital platform like an app or website. Some examples of gig work are:

• Selling products or goods online, from any of the online stores
• Drive an automobile for booked deliveries or rides
• Rent or take part of renting out property (ie: AirBnb)
• Renting equipment
• Provide on demand, or freelance work (ie: journalist, babysitting)
• Provide professional or creative services (ie: Instagram model for fashion company)

When it comes to digital platforms, businesses will use them to match workers’ goods or services to customers in need. Some examples of digital platforms owned by businesses are:

• On-demand repair or labor services
• Property and space rentals
• Delivery services
• Handmade and crafts item marketplaces (ie: Etsy)
• Ridesharing services (ie: Uber or Lyft)

For those running digital platforms/websites, and need support with managing taxes, check out this IRS site.

Tax Tips for Expat Gig Workers

It’s super important to track the earnings made on the gigs done, regardless of where you work and for how long. It’s certainly true if the work is part-time or you were paid in cash.

Any American expat who is doing gig work must report the earnings made from such work on their federal tax return (or through MyExpatTaxes!): This is especially so if your income is:

• Paid in all forms, like cash, goods, virtual currency, property, etc
• From temporary, side or part-time work
• Not reported on Form 1099-K, 1099-MISC, or any other income statement form

Here are additional tips for American gig workers abroad have for you as an American gig worker living abroad in a foreign country:

Collect your Records

We suggest to keep and collect your records, invoices and receipts all throughout the year. Some people collect them physically in a folder, or take photos and track them on online excel sheets. Whatever way of record-keeping you do, this is going to be important when it comes to filing your tax return.

Even if you don’t receive or know about Form 1099 (this report is for the total amount of payments you received from a person/entity or business during the year you’ve provided services to them) you’ll need to keep records of all the money you received from gig work and sales. 

If you earned income for gig work as an independent contractor, there is a possibility you will need to pay taxes, so some advice would be to check it out with our expat tax software to see if you need to pay.

You can avoid the penalties by paying the tax before April 15.

Collect Income Forms

Some of the businesses in the US or abroad may send forms to the IRS about the reports made to you. If they actually do this, it’s important you receive copies of the forms by January 31 of every year. Some of these forms may be: Form W-2, Form 1099-MISC, and Form 1099-K. 

Otherwise, use any sales receipts or invoices to report payments that were not reported on those forms, to the IRS- either through 1099 or W-2.

But, to be frank, if the thought of holding onto physical tax forms drives you up the walls, just use the MyExpatTaxes tax preparation software and file everything electronically!

File Your Gig Work through MyExpatTaxes

We’ll make this easy for you: Once you collect all your records and receipts from gig jobs throughout the tax year, come over to us and file US expat taxes for as little as 149€. You’ll receive helpful customer service from our team and can file in less than 30 minutes!

Additionally we at MyExpatTaxes can help you getting expat tax benefits like the Foreign Earned Income Exclusion and Foreign Tax Credit. There is a lot more to the expat tax world than meets the eye!

If you are looking for more Tax Advice for Abroad Americans view our complete US Expat Taxes Guide here.

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