Are you concerned how the new Tax Reform Bill will affect your career as a freelancer? The good news is that those who work in the gig economy are become more dominant in today’s workforce, and the latest changes actually turn out to be beneficial for people like us.
According to an article on CNN Money, an Intuit study projects growth of 4 million online freelance workers today to 7.7 million by 2020. This may be in part due to the previous lack of job growth over the last 8 years and the need to create income that is not dependent on one corporation. Now that the tax rate has been reduced to 20 percent those earning money under $157,500 a year individually or under $315,000 jointly, could really stand to benefit — this makes freelancing more appealing than ever.
If you are an independent contractor under the new tax law you are considered a “pass-through business” earning less than what a corporation does. And what about those great deductions we get to take this year? Mic reports that we can still write off our health premiums, home offices, ect. With the lower tax rate and continued deductions that would mean a considerable savings for freelance workers.
A large-scale shift toward freelance work could completely upend the labor market as we know it, and push both workers and employers into uncharted new territory. ~ Mic
Here’s a short breakdown of the lower tax rate and which items are the best to deduct directly from H&R Block:
- State and local tax deductions are now a maximum of $10,000 such as state and local taxes, real estate, and property taxes.
- Medical expenses that exceed 7.5% of an individual’s AGI can be deducted, which is now retroactive to January 1, 2017.
- Charitable deductions have increased from 50% of the gross adjusted income to 60%.
While each situation is unique there will be a general benefit to jumping into the gig economy and launching out on your own without being tied to one company. If you’ve been on the fence about working from home or out in the field as an independent contractor this year may be a great time to start.
As we start to see the benefits of tax reform for our businesses and more jobs becoming available online this is quickly become a trend for not only large corporations to hire you, but also small businesses who would like to save on employment taxes due to the high cost of Obamacare.
The 5 top freelance jobs right now are as follows according to Business News Daily:
1 – Language services
If you know several languages such as Mandarin and English then there may be some great job opportunities for you. There are a growing number of companies that need interpreters, especially in the medical and legal fields.
2 – Market research
Consumer reporting and market trends are important to the growth and brand persona of a company. There are many different ways a business may need to hire someone for research whether it is for technology, marketing, sales, ect.
3 – Education
If you have a bachelor’s and/or a teaching degree you could take advantage of the rise of online education as a K12 teacher, tutor, college professor, ESL teacher, or teaching in an online education platform such as Coursera or Ed2Go.
4 – Business and marketing
Not only is this area of expertise a popular degree choice in college, it is also becoming more in demand as online marketing grows and evolves. There are several different avenues you could take such as social media measurement and management, search engine marketing, email marketing, and content writing.
5 – Web and app development
Technology is changing into a more AI and voice enabled world — our software and apps must be developed to keep up with the latest uses and trends. As a result, developers, coders, and technology professionals are in high demand with large corporations all the way down to the new startups.
There is no better time to start planning your transition now into freelance life. Even if you begin with a part-time side hustle you can still benefit from the latest Tax Reform Bill and start building toward your future. As your business grows keep in mind that the new structure may be better served by forming an LLC, which you should discuss with a trusted CPA.
It’s not hard to become an online freelancer or start your own business while working in a full-time job. Just download my free eBook, and get started on your career today: