Are you a “gig worker?” That may seem like an odd question but as the IRS is cracking down on unreported and underreported income judges will want to stay on top of the duty to report outside income – such as (but not limited to) stipends for performing weddings, royalties and honorariums from publications or speaking engagements and per diem pay – regardless of whether a “1099 form” was provided. These are among the examples of taxable “gig income” – and it’s not entirely bad news because judges who report “gig income” can deduct legitimate expenses related to producing that income.
To illustrate, I am a part-time municipal judge. Taxes are withheld from my pay and each year I get a W-2 form. I am also a supplemental circuit court commissioner and every year the county sends me a 1099-NEC form (although taxes are not withheld). I occasionally earn per diem pay from filling in for other judges (for which I may or may not get a “1099 form”) and then I receive stipends for officiating at weddings. All of this is taxable income that I report on a schedule C attached to my Form 1040 tax return.
State law requires me to wear a black robe on the bench so my traveling robe is deductible. Licensing expenses such as State Bar dues and mandatory continuing legal education may also be deducted. If I am asked to fill in for another judge or officiate at a wedding, I’ll usually get a call or E-mail so related cell phone and internet services expense may be legitimate deductions. Same for mileage, pens, legal pads, my traveling laptop and iPad. The IRS requires proof of expenses so I scan my receipts which makes my scanner potentially deductible (the Brother ADS-1700W scans directly to a USB drive which means I don’t have to connect it to a computer to scan). Ditto for the USB drives and backup drives on which this data is stored. By way of illustration and not limitation these are examples of what may be legitimate deductions.
Recordkeeping is essential but doesn’t need to be painful. Tech savvy people might use a program such as Quicken or an Excel spreadsheet to record this information. I enter my per diem assignments and weddings into Google calendar which essentially functions like an online diary. Some people may prefer keeping an old-fashioned journal and stash their receipts into an envelope or box. I try to pay for everything with a credit card that not only provides documentation but also earns airline miles. The key is to use whatever method works for you.
Depending on how much “gig income” you earn and the amount of taxes withheld you may need to file quarterly federal and state estimated tax reports and pay estimated taxes (including Social Security and Medicare self-employment taxes). I do this online by credit card (and earn more airline miles).
I come from a family of accountants – that’s why I’m a lawyer – and as an attorney I’ll add the disclaimer that this information is only for guidance and you may wish to consult a tax professional or the IRS for advice. Further information on “gig economy income” can be found on the IRS website.