This 20-Something Woman Is Living Your Tax Nightmare

Photographed by Rockie Nolan.
Taxes are terrifying. We didn’t really need a survey to prove that, but a recent study from NerdWallet found that 80% of millennials are afraid of making a mistake on their taxes. Of course they’re afraid: We live in the age of the gig economy, and for many people, filing their yearly tax forms isn’t as simple as plugging in the income they’ve made from a single job. It’s likely there’s a small pile of 1099s next to that W-2.

Things get even more confusing when you’re paid cash for most or all of your work. These under-the-table transactions can be great in the moment, but not so great when April 15 (or April 18, this year) rolls around. You are required by law to file all cash income, but that can be tricky, especially if you haven’t been carefully tracking it. And it’s not like most of us learned about tax prep in college.

Amanda* is a successful videographer working in New York City, but her career path wasn’t a straight one. Like many millennials who entered the workforce in the early 2010s, she spent a few years bouncing from gig to gig with no steady income. And despite her resourcefulness (managing to survive without taking on credit card debt while living just above the poverty line), she didn’t pay her taxes for two years.

A year into a well-paying, full-time gig, she feels a lot of guilt about those unpaid taxes — but she’s also totally unsure of the next steps she should take. We introduced her to Shana Bickel, a certified accountant who works with a lot millennials, and walked Amanda through the filing process. Ahead, Amanda shares the story of how she ended up not paying taxes — and the steps she’s taking to fix the problem.

I’m 27, and I owe the U.S. government almost $5,000 in back taxes. They're from two years when I was underemployed and barely making $15,000 annually — scraping by on a series of low-paying contract gigs. This debt keeps me awake at night.

When I graduated with a degree in journalism in 2011, I left school feeling like I had fairly marketable skills. I knew how to use a camera; I could write; I was fairly ambitious. But for a few reasons, I decided to stick around my home state of Virginia rather than pursue a career in New York City. I was in a band with my boyfriend. The cost of living was so cheap. And I didn’t have anyone on the sidelines really pushing me to do something more with my life.

I got a full-time job working for a clothing boutique in my hometown. It was a small business, so I did a little bit of everything. I didn’t make very much money, and the job was far from creatively satisfying. But I was still upset when I got fired about eight months in. It wasn’t some crazy, dramatic thing; they just wanted to do something different. And I was left searching for a full-time job in a state where it was difficult to make a living as a creative.

I was searching for a full-time job in a state where it was difficult to make a living as a creative.

My parents had been so happy I had consistent income; they weren’t concerned about whether I was feeling professionally fulfilled. The important thing was job stability, and so of course they pushed me to find another full-time job. And so I looked for one. For a while. I also economized. I moved out of my apartment and in with my boyfriend. To make ends meet, I relied on random jobs I found on Craigslist. The jobs were terrible, but easy, and I managed to make it work for four or five months.

It was through one of these random gigs that I was introduced me to Jeanne*, a Toronto-based filmmaker. After I did a little work for her locally, Jeanne asked me to move to Canada to edit a trailer for a film she was making. She’d cover the cost of the flight, my housing, and many of my living expenses on top of a small fee in exchange for the work. I was 23, I had nothing going for me in Virginia, and I’d never been out of the country. So I said yes. And I regretted it right away.

It wasn’t that Jeanne was a horrible person, or that Toronto was an unfriendly city. But I knew almost immediately the job was going nowhere. And it was a bad feeling. The gig was supposed to last two months, and it stretched into three and then four. I was doing more than just editing the trailer. She had me handling logistics and shooting footage, and all in all, I felt woefully unprepared for that kind of responsibility. In April 2013, I finally left Toronto. I headed to Chicago, Madison, and then finally back to Virginia — the creative wasteland.

Looking back on it, I feel like this was a lost period of time. I was so lazy. I worked on some creative projects, but I had no real motivation. How would I get the experience I needed to get the jobs I wanted? Nearly a year passed of getting by on Craigslist jobs and working for the indie filmmaker, and I was no closer to achieving my creative or professional goals. And in the midst of this, I just didn’t pay my taxes. I didn’t have a single 1099 to my name. I couldn’t bear to think about how much income I had made in 2013. I went so far as to file for an extension with the IRS, and I didn’t do anything else.

I made the excuse that I was too busy making ends meet (barely) and planning a move to New York with a guy I was seeing at the time. He was doing the same crappy freelance video production work I was, and he wanted to move to New York City, too. So we figured we could rely on each other for some financial support and take a leap.

The move didn’t mean an end to the struggle. I grabbed a gig here and there, still pretty low-paying. Sure, there were more jobs in New York, and they were in the film industry, but I had no consistency in my life. Lots of people in this city make the freelance economy work for them, but it wasn’t for me. I hated trying to create my own structure, and I was bad at self-motivation. I’m a terrible accountant, and aside from making sure I had money for rent, I wasn’t good at budgeting for other expenses — taxes among them.

To make it all worse, I wasn’t getting along with the guy I was living with. It’s funny and sad to realize how many of the romantic and social choices I’ve made in my life had something to do with my financial instability.

In September, I finally moved out and into another apartment with roommates. I was living deep in Bushwick, and my rent was almost as cheap as it had been in Virginia. Money was still super tight, but then, I had an epiphany: I could get a part-time job to alleviate some of the stress.

Why didn’t I think of this earlier? I’m not sure. I went to work for a fancy bakery in Soho, making $7 an hour. It was good to have some stability. And almost as soon as I took that part-time gig, I found a full-time job.

Money was still super tight, but then I had an epiphany.

Before we broke up, my ex kept nudging me to network. I didn’t really think it would be that easy. I met up with a girl from college who worked for a media company I really admired. I simply asked her: "Are they hiring?" Two emails later, I had an interview with the head of the video department. For some reason, he liked me and gave me a full-time freelance offer that turned into a full-time position — complete with health care and a 401(k). I didn’t know life could be so easy.

Yet, when April came around, I once again didn’t file taxes. I didn’t know where to begin. This had been one of the craziest years of my life, both logistically and financially — so I just ignored the problem.

And here I am. Another year has gone by. These days, I have an emergency savings account, and I’m contributing to my 401(k). I have no student loan debt (thank you, mom and dad), and despite the fact that I was living paycheck to paycheck for so many years, I never accrued credit card debt. And yet, this black cloud has been hanging over my head: those unpaid taxes.

It was terrifying taking the steps to work with Shana Bickel. I put it off and put it off. And yet, I knew I had to do it. The first step was writing down a ledger of everything I made in 2013 and 2014. It was a painful experience: going through old emails, remembering what my life was like during those two years. And when I handed off the ledger to Shana, I didn’t add up the total. I didn’t want to know. What I really wasn’t prepared for, though, is how much I’d owe.

Shana asked how I was feeling before she gave me the bad news, as if she was trying to protect me. “Do you know how much you made in 2013?” she asked. I had no clue. That year, squeaking buy on a series of freelance gigs, I made $15,000. The poverty line in the U.S. is just under $12,000 a year. And yet, thanks in part to late penalties and interest charges, I owe the federal government $2,500. Honestly, I don’t know how I would have paid even $100 in taxes in the spring of 2014. My monthly goal was to pay the rent. I was living on food from the local food bank. There was rarely a dollar to spare.

Things were about the same in 2014. I made a little more than $14,000 in under-the-table gigs, and $900 the month I worked at the bakery. I owe $2,400 in federal taxes.

The thing is, I have no 1099s or W2s from 2013. The government has no record of this income. I asked Shana to tell me what would happen if I don’t pay. Of course, it’s illegal. She pointed out that I won’t be contributing to social security, which means in 45 years, I won’t be able to collect as much as if I had paid taxes my entire working life. But the IRS probably won’t be putting a hold on my passport, preventing me from leaving the country — like they would for tax dodgers who have received 1099s or W2s.
I fundamentally believe in the purpose of taxes. I believe in the importance of the social services that they pay for; I did take advantage of food banks when I was underemployed. If I had still been freelance when I turned 26, I probably would have signed up for Obamacare. But I can’t help but feel frustrated that I was never taught how to pay my taxes. That might sound naive, but where was I supposed to learn those skills? I certainly didn’t pick them up in college. My parents aren’t the type of people to offer financial advice. I graduated into a terrible economy. I had a passion to pursue a creative industry, but not much support. I was young. I made mistakes. And while there are many people in worse financial shape than me, I feel ashamed to have this debt.

I’m not sure what my next steps are — pay the bill, ignore it, or just report a fraction of the income I was paid those two years? Somehow I thought things would become less complicated if I finally faced up to this debt, but it sure doesn’t feel like it.

There’s so much praise for the so-called gig economy and the freedom it provides women. But you need to go into it with your eyes wide open, with a full understanding that it’s up to you to manage your own accounts.

If you’re unsure how to pay taxes, but you don’t have the resources to hire a certified accountant, there are services that can help. The Volunteer Income Tax Assistance (VITA) program provides free filing help for individuals who make less than $54,000 a year (or $62,000 in New York City). For more details, call 800-906-9887 or click here for the locator tool and more info.

*Names and some details have been changed.

More from Work & Money