If you're working in the gig economy, you may not be setting aside enough to pay your taxes. This is especially true if you're used to working as an employee, receiving a W-2 and paying your taxes once a year. As a Lyft driver, a food delivery person or an AirBnB host, you're probably classified as an independent contractor. That means receiving a 1099 and paying estimated taxes on a quarterly basis.
The phase “income tax audit” strikes fear into the hearts of most people who reside in the Los Angeles, California, area. There is good reason for this as the process is not only intimidating but can be time consuming as well. Audits that do not go well for the taxpayer will likely result in having to pay additional amounts to the Internal Revenue Service. Those who find themselves in this situation can also expect to pay interest and penalties.