Wednesday, August 24, 2016

Uber Drivers, Airbnb Hosts Get Tax Tips As IRS Launches New Web Page On Shared Economy

FROM FORBES.COM

A friend recently suggested to me that the 9-to-5 job is dead. He may be right. You no longer have to be at a certain place at a certain time to make money. You can, with the right apps, connect with others in ways that allow you to capitalize on lending or renting goods and services from practically any space at any time. The idea that you can share, rent, or lend your skill set, home or car with the click of a mouse is sometimes referred to as the gig economy or sharing economy.

You’ve likely already seen or used the sharing economy, even if you didn’t know what it’s called. Examples include Uber and Lyft, where drivers turn into near-chauffeurs with a few clicks, Airbnb, where homeowners become hoteliers, and DogVacay, where dog lovers can transform their spaces into temporary kennels.

The shared economy poses new challenges when it comes to how we view goods and services – especially when it comes to tax. To assist taxpayers, the Internal Revenue Service (IRS) has launched a new web page designed to help taxpayers involved in the sharing economy figure out what they need to know about reporting, filing and paying tax.


“This rapidly evolving area often presents new challenges for people engaged in these economic activities, whether they are renting a room or providing a ride,” said IRS Commissioner John Koskinen. “The IRS is working to help people in this area by providing them the information and resources they need to file accurate tax returns.”

The web page, dubbed the Sharing Economy Resource Center by IRS, offers tips and resources on a variety of topics ranging from filing requirements and making quarterly estimated tax payments to self-employment taxes and special rules for reporting vacation home rentals.

Tax tips on the page include:

Income received is generally taxable, even if the recipient does not receive a form 1099, form W-2 or other income statement. This is true if the sharing economy activity is only part-time or a sideline business and even if the recipient is paid in cash.

Depending on the circumstances, some or all business expenses may be deductible.

Special rules apply to the rental of a home or apartment used by the taxpayer as a residence during the taxable year. Usually, rental income must be reported in full; any expenses need to be divided between personal and business purposes. But if your home or apartment is rented out fewer than 15 days during the year, none of the rental income is reportable, and none of the rental expenses are deductible.

Taxpayers involved in the sharing economy often need to make estimated tax payments during the year to cover their tax obligation. These payments are due on April 15, June 15, September 15 and January 15; penalties may apply for failure to pay on time.

You’ll also find links to sites used to make tax payments, “how to” videos, and IRS Publications.

To find more tips and links for the shared economy, click over to the page found at IRS.gov.