How to Protect Your Identity in the Gig Economy

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If you’re a gig worker, freelancer, or independent contractor, your identity may be at risk. You’re constantly asked to give out personal information. Sometimes, it’s to companies you barely know. Here’s what you can do to protect yourself.

1. Know Who You’re Dealing With

Think about stranger danger any time you interact with someone new.

  • Were they vetted by a gig platform or referred by someone you trust?
  • Do they have an existing website with an email address tied to that domain name?
  • Do they have an active social media profile or local business reviews?
  • Is their business registered with the state or local government?
  • Do they have a verifiable physical address?

Depending on what type of work you do, the expectations may vary. The point is to pay attention and think things through before you give personal information to random people off of Craigslist.

2. Know Their Tax Obligations

Since your tax information is likely your most sensitive information, it’s important to know who needs it and who doesn’t.

If you work on a gig platform, the platform generally takes care of tax reporting. This reduces how many people you need to give your tax information to. If your individual clients ask for tax information, they may not understand how things work or they may be scammers.

Another way to avoid giving out your tax information is to use an invoicing service such as QuickBooks, Square, or FreshBooks. When you collect payments electronically, the payment processor is responsible for reporting your income on Form 1099-K. Individual clients should not send a 1099-NEC and therefore don’t need your tax identification number.

3. Get an Employer Identification Number

You can and generally should get an Employer Identification Number to use in place of your Social Security Number when doing business. If you’re a sole proprietor, the IRS matches the EIN to your SSN so they know income reported under your EIN is your personal income. However, your EIN is much less useful to identity thieves than your SSN.

The IRS issues EINs directly. It only takes a few minutes to fill out the form and get your EIN. There is no need to use or pay third-party services to do this for you.

4. Understand the Risk of Data Breaches

Some people may take the approach that they trust their clients so worrying about identity theft is overly paranoid. They may also worry about offending or upsetting their clients.

All businesses are at risk of data breaches. In fact, identity thieves are increasingly going after non-financial businesses to try to find employee, contractor, and customer data. If you have a lot of clients, there’s a good chance at least one will get breached. That’s why it’s important to limit what information you give out as much as possible.

5. Monitor Your Credit

Since you’re at increased risk of identity theft because of your freelance or gig work, it’s more important to regularly monitor your credit. It’s much easier to get a new account shut down than it is to find out that a thief has put you thousands of dollars in debt with multiple negative marks on your credit report.

MyFico and Credit Karma both offer ongoing credit monitoring. You may also want to periodically check the three major credit bureaus — Experian, TransUnion, and Equifax.

6. Sign Up for Identity Theft Protection

Identity theft protection provides additional guards on your identity such as checking whether your information has been breached. The difference between this and credit monitoring is that you can find out identity thieves have your information even if they haven’t opened credit products in your name. You may also receive insurance that protects against the financial costs of identity theft.

Identity Guard and LifeLock are two common providers of identity theft protection services.

Image by Mohamed Hassan from Pixabay.

Need personal help? Click here for additional free resources or to find an accountant, attorney, or other professional near youRemember: This blog post and the comments provide generalized information that may be out of date or inaccurate for your situation. Always schedule a personal consultation with an appropriate licensed professional in your area before taking action. For full terms of use, click here.

Have general questions about this post or want to learn more about a related topic? Please leave a comment at the bottom of the page. Comments are public, and I can’t provide individual advice, but it helps me make the posts more useful for the future. Please do not post personal information. If you need personal assistance, please contact the relevant government agency or hire an appropriate professional near you.

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