1099, Being Freelancer, Finances and Taxes, Self-Employed, Taxes

Got Audited? Independent Contractor

Got audited recently? When it comes to taxes, one thing everyone fears that this might happen to them. If you’re an independent contractor, the chances of you getting audited on your 1099 taxes are higher. On top of that, the chances of you making mistakes increase as well since self-employed taxes are a bit different and more complicated.

If you ever find yourself faced with an audit, here is what you need to know:

The Chances Of Getting Audited

The odds of getting audited are fairly low. In 2014, the IRS audited .86% of all individual returns. You may be randomly selected for an audit or the IRS may choose to purposely audit your taxes due to suspicious activity.

Generally, you should keep your tax returns for 3 years in case of an audit. However, this might vary according to your circumstances. You need to keep your tax returns for 6 years if you have underreported your income by more than 25%. If you have ever filed a fraudulent tax return or failed to file one, you need to keep your tax returns indefinitely.

1099 tax returns have a higher chance of getting audit. When you do your taxes, be sure to have proper documentation for everything, including 1099s from all employers and receipts for business expenses. This will help you in the event of an audit.

The Auditing Process

If you are selected for an audit, you will receive a letter notifying you. The letter will also state the reason for the audit. Typically, the IRS will request various documents and proof of income, which you can send via mail.

The IRS may also ask you for an in-person interview. This may occur at the IRS office, your home, your office, or at your accountant’s office. Typically, you and the IRS agent will review your documents more in-depth.

How To Properly Prepare

Your notification letter will tell you the reason for your audit. This will help determine what kind of documents you should gather. You will also be asked to submit certain documents as proof so it’s best to make sure you have everything organized.

Getting Legal Advice

For an initial audit, you may not need to get advice from an accountant or seek a lawyer. However, if the IRS finds valid mistakes, it may be beneficial to speak to a CPA. Of course, if the IRS seems to think there is fraud involved, you should speak with a lawyer. If you worked with an accountant to prepare your taxes, they may offer a audit guarantee. While you are still liable for any mistakes, they may be able to help you through the process.

Understanding The Result

Hopefully, after an audit, the IRS will be satisfied with the documentation you provided and leave it at that. However, they may determine that you owe additional taxes. Typically, they will allow you to pay using a credit or through installations, if you have difficulty paying in full. The situation may be different though if it was determined that you committed fraud. To learn more about your options, visit the IRS site.

 

On-demand freelance lawyers
Companies, Connecting talent, Future of Work, Services

On-Demand Lawyers

On-Demand Workers ‘Gone Wild.’ We are not talking about the retired guys driving Ubers or a stopping by our house to fix your wifi. Now there’s On-Demand freelance lawyers. And other White Collar folks are rapidly joining our On-Demand Society. Not just as individuals consuming services. They are not providing them. UpCounsel, a start up in my home town, is a good example. It is something very close to an for Lawyers — a market place that offers experienced lawyers to do micro-tasks. Think of a bit like high end Mechanical Turk for Lawyers. Or like Doctors On Demand.

Today’s UpCounsel’s job board listed the following:

  • Trademark Registration needed at a fixed fee of $645
  • Single Member LLC Formation at $595
  • Commercial Lesse Review starting at $950

I also tested it out — looking for a lawyer who can help me license an application  I developed to a large public company. (I need advise on how to protect my software, how to price it and also how to go about writing up an agreement). After I entered my zip code and some information about the project, it displayed a bunch of lawyers and their contact info to me. It felt a little like Match.com (I know cause I met my wife on that service).

This is not my wife, but you can see what I mean (sorry if this sounds sexist)

Lawyer from UpCouncel

Unlike Match, UpCouncel’s A-La-Carte approach offers assistance at discounted prices. It also enables lawyer to focus on the areas they are most passionate about. Upcounsel manages all the electronic paperwork and also ensure the lawyers are paid. What’s the appeal for lawyers involved? Predictable Income? Another channel to reach clients? Another way to deal with the touch economy they are dealing with. As the NY Times recently wrote about   school graduates are burdened with debt and are finding it difficult to find work. (For a good research report on this issue)

This White Collar approach will seep into other businesses. We will see more and more highly trained and educated doctors, lawyers and other professions. The question is how will this approach impact these industries. Will it be like Uber and turn industries upside down?

Probably not for a while. I researched two competitors tonight:

  1. Attorneyfee.com, but their website down (permanently?)
  2. QuickLegal, but after being live for over a year, it is only available in California and its blog has not been updated since June.
Filld just raised $3.25 million to make sure you'll never have to pump your own gas again
Companies, Ondemand Platform, Technology Platforms

Filld: You’ll never have to pump your own gas again

On-Demand Start-Up:

Filld, a startup that delivers gas on-demand, day or night, has raised $3.25 million in seed funding in a bid to take on the gas station model…. CEO Aubuchon says the early adopters of the app have been drawn to the ability to have your tank filled overnight, and indeed this does seem convenient. Tap on the app, go to bed, and wake up with a full tank. You have just removed one annoying detail from your life.

Unlike one of its main competitors in the space, Purple, Filld’s trucks are certified to determine exactly how much gas you need. While Purple can only fill a set amount — let’s say 10 or 15 gallons at a time — Filld uses a similar pump to one you’d find at a gas station, which clicks when it’s done. All you have to do is tell Filld to fill it up.

After setting up your profile on Filld, the app is simple. You order the gas like you would order an , by placing a pin at the location, and one of Filld’s trucks comes and fills your tank. If you have a locking gas tank door, you have to leave it open a crack for them.

 

 

Companies, Income, Uber

Two Incomes Are Better Than One

The other morning, I waited on my doorstep for the Uber Car to arrive. Suddenly, a Prius pulled up with a big Bento Food advertisement on the passanger door. I just assumed it was some freelance food delivery guy, but when he rolled down the window and said ‘U Scott?,’ I knew it was my Uber man. I am slowly seeing Uber and Lyft cars with advertising for other companies on their car doors. This is a smart on-demand move by these 1099ers; the only draw back is that it confuses the passenger. Bento is paying paying these drivers $200+ a month to have their big fat sticker on their car. The driver is armed with little post cards with $8 off coupon numbers that they distribute to the customer. The driver receives $1 for every transaction. I expect to see more of these drivers test out the waters in other On-Demand businesses. And of course, they can find all the domestic ones listed her at the On-Demand Society website.

Background Check, Companies, Uber

Uber Security Alert

 

Another data and cyber security related issue for Uber. The company accidently leaked the personal data of hundreds of drivers. They shared social security information, vehicle numbers, pictures of drivers’ licenses and more. This was first reported on Reddit Tuesday night and word has spread quickly. Again, this reinforces the importance of taking control of your identity and reputation. Read more about this here.

Acceding to Motherboard, one driver said that he uncovered many confidential documents when he went into the Uber system. He found “a lot of taxi certification forms and livery drivers licenses” in addition to “W-9 forms with Social Security numbers for taxi cab companies.”

Uber came clean and admitted that they are at fault. According to an Uber spokesperson “Within 30 minutes our security team had fixed the issue.” Umber believes the leak only impacted 600 or so drivers. The leak was the result of a bug with the Uber Partner app, which focuses on giving drivers more information so they can be better Uber partners. Ironically, Uber just released a new version of their Uber Partner App. The company described the app as…

Through feedback sessions, research and testing, we collaborated with drivers to understand how our team of engineers, designers, and data scientists could build features that would best meet their needs. The result is an app that puts personalized insights at drivers’ fingertips.

This isn’t the first time Uber’s has run into security related issues.. Earlier this year, sensitive driver related information was accessible by outsiders. Shortly thereafter, the company tried to improve it’s public image when it comes to Security (and also get hold of these situations) by hiring it’s first Chief Security Officer, Joe Sullivan, who had held a similar job at Facebook.

Uber is quickly using its infrastructure to move into new services, such as food delivery with UberEats and package delivery with Uber Rush. Undoubtedly it will slowly add more services to its portfolio. So now is the time to improve its infrastructure, it’s business processes, privacy and security.