Last month, we looked at the legal dustup between ride-sharing company Uber and its contracted drivers and speculated on ways sharing economy businesses might affect tax preparation. One EA we interviewed suggested that taxpayers should understand what might be considered taxable income, making sure to review the appropriate forms. It would appear that the Internal Revenue Service agrees.
The IRS recently unveiled an appropriately named, roughly 2,000-word webpage containing plenty of information for those who are part of (or prepare returns for) this type of business: the Sharing Economy Tax Center. Advising taxpayers and tax preparers to be aware of the issues that sharing economy professionals might face when addressing tax liability, the IRS highlighted two key areas, individuals performing services and companies providing services:
“Issues for Individuals Performing Services
- Filing Requirements
- Employee or Independent Contractor
- Tax Payments, Including Estimated Tax Payments
- Self-Employment Taxes
- Rules for Home Rentals
- Business Expenses
Employment Tax Issues for the Companies Providing Services
- Determining Whether the Individuals Providing Services are Employees or Independent Contractors
- Employer/Payer Employment Tax Obligations”
Essentially, gather all the tax-relevant information about the income received from whatever gig you’re working and make an informed decision in your tax reporting to the IRS. The page breaks down each of the issues facing individuals and companies to help in this decision-making process, as well as providing links to relevant forms.
Anyone listing their apartment as an Airbnb stop, driving a Lyft route, or otherwise contributing to the growing sharing economy would be well served by taking a look at the Sharing Economy Tax Center before filing. Well, that and another really important key to making sure your taxes are filed properly: seeking out a tax pro. But even if you work closely with a tax preparer each filing season, it’s always a good idea to understand your tax obligations – if for no other reason than having the pertinent information available when it’s time to drop off your tax packet.