Have you joined the AirBnB crowd or are you sharing your car, your bike, your house to dog sit…then you need to consider the tax implications of the income you earn with these activities….YES, you owe tax on any compensation you receive.
The IRS defines the “sharing” economy as economic activity generated through the use of technology that lets you earn money from your assets, such as a car. Income from these activities, including room rentals and car rides, is taxable, and you may be able to deduct related expenses. Depending on the work you do, special tax rules can apply. Contact us for information about how to report your sharing activity income
As the sharing economy grows, the IRS has responded with new resources for taxpayers and closer scrutiny on taxpayers who, intentionally or unintentionally, are paying more or less than they should. The IRS launched a Sharing Economy Tax Center on its Web site, highlighting tax issues for individuals and companies performing services in the sharing economy.
Earlier in the year, National Taxpayer Advocate Nina Olson told lawmakers that more than 40 percent of service providers in the sharing economy were unaware of possible estimated tax requirements. At present, third-party payment networks are only required to issue Form 1099-K when service providers have at least 200 transactions in a year and earn at least $20,000. Expect those rules to change.
Your “sharing” activities have probably made having your return prepared by a professional a must. Most taxpayers are not knowledgeable enough with the tax laws to accurately report their income or determine how best to reduce the tax liability resulting from making a little extra cash on the side….
Call us to assist with your tax return preparation. We specialize in complicated returns and have limited availability to add new clients as the year gets older….