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The Gen Z Freelance Movement and the Tax and Bookkeeping Challenges That Come With It
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If it seems like more and more employees are turning to freelance work these days, you're not imagining things. According to one recent study, there are currently 73.3 million freelancers in the United States alone. The fast-paced mobile era that we're now living in, coupled with the advent of the fabled "Gig Economy" and companies like Uber and Lyft, have certainly helped bring this about. But what is fascinating isn't necessarily how many freelance workers there are - it's who, exactly, is doing the freelancing.Another study indicated that Generation Z in particular seems particularly fascinated by the idea of striking out on their own, with 53% of them having chosen self-employment of this nature in most cases. Approximately 50% of all Generation Z respondents to one survey, meaning those who fall between the ages of 18 and 22), engaged in freelance work of some kind.It makes sense that people would want to have more control over their own employment and their ability to earn a living. That doesn't mean it is easier than "traditional employment," however - especially when it comes to the financial side of the equation. Bookkeeping and especially taxes present significant challenges that people need to understand before choosing to go down this path moving forward.The Financial Side of Generation Z and Freelancing: An OverviewOne of the biggest challenges that freelance workers of all generations have to deal with has to do with the idea of paying self-employment taxes.Not only is it easy to suddenly find yourself working a freelance job - it can also happen very quickly. This is true to the point where someone may have made the decision without taking the time to research what the long-term implications actually are. One of the most pressing of those is self-employment taxes. In addition to whatever it is decided that you owe by way of income tax, you'll owe an additional 15.3% on the first $160,200 of net profits no matter what.This money is designed to cover Social Security and Medicare taxes - factors that are usually handled by a traditional employer. In a freelance situation, that burden falls on you. If you're not aware that you have to pay this amount, or if you're not able to accurately estimate what it might be given your income, it could end in a significantly larger tax bill than you had assumed you'd be facing.Along the same lines, many new freelancers in particular are surprised to find out that they're supposed to pay taxes throughout the year - not just once like everyone else. Indeed, quarterly estimated tax payments are mandatory and if you don't handle this, you could be hit with penalties before you even have a chance to properly file.
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Tax and Financial Insights
by NR CPAs & Business Advisors
2026 IRS Mileage Rates: Key Updates and Insights
The IRS has rolled out the inflation-adjusted mileage rates for 2026, offering taxpayers an efficient way to claim deductions for vehicle-related expenses incurred for business, charity, medical, or moving purposes. These adjustments reflect the continued economic shifts impacting car operation costs.
Effective January 1, 2026, the new standard mileage rates are established as follows:
- Business Travel: Increased to 72.5 cents per mile, inclusive of a 35-cent-per-mile depreciation allocation. This marks a rise from the 70 cents per mile rate set for 2025
- Medical/Moving Purposes: Reduced slightly to 20.5 cents per mile, down from 21 cents in the previous year, reflecting the variable cost considerations.
- Charitable Contributions: Consistent at 14 cents per mile, a fixed rate unchanged for over a quarter-century.
As is typical, the business mileage rate considers the integral fixed and variable costs of automobile operation. Meanwhile, the medical and moving rates remain contingent on variable expenses as determined by the IRS study.
It is critical to note that the One Big Beautiful Bill Act (OBBBA) held firm on disallowing moving expense deductions except for specific cases within the Armed Forces and intelligence community, marking a substantial shift since 2017.
When engaging in charitable work, taxpayers might opt for a direct expense deduction over the per-mile method, covering gas and oil costs. However, comprehensive upkeep and insurance costs are non-deductible expenses.
Business Vehicle Use Considerations: Taxpayers can alternatively compute vehicle expenses using actual costs, which might benefit from shifting depreciation rules, particularly through bonuses and first-year advantages. Keep in mind, however, reverting from actual cost calculations to standard rates in subsequent years is restricted, particularly per vehicle protocol and when exceeding four vehicles in concurrent use.
Additionally, parking, tolls, and property taxes attributable to business can be deducted independently of the general rate, an often-overlooked advantage by many business owners.
Tax Strategies for Employers and Employees: Reimbursements based on the standard mileage framework, providing the right documentation is in place, remain tax-free for employees. Meanwhile, the elimination and continued prohibition of unreimbursed employee deductions continue, with particular exceptions offered to qualified personnel across specific occupations.
Opportunities for Self-employed Individuals: Entrepreneurs remain eligible for deductions on business-related vehicle use via Schedule C, with potential to account for business-use interest on auto loans.
Heavy SUVs and Deduction Advantages: Heavier vehicles exceeding 6,000 pounds but under 14,000 pounds open opportunities for substantial tax deductions through Section 179 and bonus depreciation avenues. The lifecycle of such a vehicle bears implications on recapturing initially claimed deductions, urging cautious tax planning.
For professional guidance on optimizing your vehicle-related tax deductions and understanding their implications on tax strategies, contact our office in Coral Gables, Florida, where expert advice and strategic insights are just a call away.
Educator's Deduction Reform: Key Changes Under OBBBA
The One Big Beautiful Bill Act (OBBBA) introduces significant enhancements for educators' tax deductions starting in 2026, offering both strategic opportunities and planning considerations for educators who qualify. With the reinstated itemized deduction for qualified unreimbursed expenses, educators have a broader spectrum of financial relief. This is complemented by the retention of the $350 above-the-line deduction, allowing educators to maximize their tax benefits by selectively allocating expenses between these avenues.
Understanding the nuances of these changes is crucial for educators and financial advisors alike. The dual-option deduction strategy can potentially enhance tax efficiency, thereby aligning with broader financial planning goals.
At NR CPAs & Business Advisors, based in Coral Gables, Florida, our expertise in tax preparation and planning provides invaluable support to educators navigating these changes. Our comprehensive approach, combined with personalized advice from our experienced team, ensures compliance and optimization in line with the latest tax legislations.
Given these updates, it is imperative to engage with seasoned professionals to fully leverage your deduction strategies. Contact us today to streamline your tax planning under OBBBA's new guidelines and maximize your deductions for upcoming tax years.
