If you use one of the many online platforms available to rent a spare bedroom, provide car rides, or to connect and provide a number of other goods or services, you’re involved in what is sometimes called the sharing or gig economy.
An emerging area of activity in the past few years, the sharing economy has changed how people commute, travel, rent vacation accommodations and perform many other activities.
Also referred to as the on-demand, gig or access economy, the sharing economy allows individuals and groups to utilize technology advancements to arrange transactions to generate revenue from assets they possess - (such as cars and homes) - or services they provide - (such as household chores or technology services).
Although this is a developing area of the economy, there are tax implications for the companies that provide the services and the individuals who perform the services.
This means if you receive income from a sharing economy activity, it’s generally taxable even if you don’t receive a Form 1099-MISC, Miscellaneous Income, Form 1099-K, Payment Card and Third Party Network Transactions, Form W-2, Wage and Tax Statement, or some other income statement. This is true even if you do it as a side job or just as a part time business and even if you are paid in cash. On the other hand, depending upon the circumstances, some or all of your business expenses may be deductible, subject to the normal tax limitations and rules.
The IRS encourages taxpayers participating in the sharing economy to understand the potential tax issues affecting them. The IRS is providing additional information to help people, and many tax professionals can assist with tax issues and questions related to this emerging area. The tax software industry is also looking at this area, and many software programs can help when people prepare their taxes in 2017.
The following tax issues may apply to those participating in the sharing economy:
- Issues for Individuals Performing Services
- Issues for the Companies Providing Services
Issues for Individuals Performing Services
The IRS reminds taxpayers in the sharing economy that there are several tax components they need to keep in mind throughout the year, not just when it comes time to file the tax return. Important areas include these:
Filing Requirements
Whether or not you participate in the sharing economy, if you received a payment during the calendar year as a self-employed individual, an employee or a small business, you may be required to file a tax return to report that income to the IRS. This includes payment received in the form of money, goods, property, or services.
Are you working a regular job and a side gig? Or, are you working in the gig economy and have questions about your income and expenses? We guide clients who work in the gig economy and help to ensure they meet thier tax obligation while enjoying the credits and deduction that are unique to their work. Contact us at info@zinnerco.com or 216.831.0733 to learn more. Our professionals are happy to help and ready to start the conversation.
*This article appears courtesy of IRS.gov
