Basic Tax Tips for the Sharing Economy

Basic Tax Tips for the Sharing Economy

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Basic Tax Tips for the Sharing EconomyUber, AirBNB, Craft Sales, Etsy Sales, etc

If you rent a spare bedroom, provide car rides or a number of other goods or services, they may be involved in what the IRS calls the sharing economy. The IRS website now has a Sharing Economy Tax Center. This site helps taxpayers find the resources they need to help them meet their tax obligations.

Here are a few key points on the sharing economy:

Taxes. It does not matter whether it is only part time or just a sideline business, if payments are in cash or if an information return like a Form 1099 or Form W2 is issued – the activity is taxable.
Deductions. There are some simplified options available for deducting many business expenses for those who qualify. For example, a taxpayer who uses his or her car for business often qualifies to claim the standard mileage rate, which was 53.5 cents per mile for 2017.

Rentals. If a taxpayer rents out his home, apartment or vacation home but also lives in it or spends time there during the year, special rules apply. On the IRS website there is an Interactive Tax Assistant Tool, Is My Residential Rental Income Taxable and/or Are My Expenses Deductible? to determine if their residential rental income is taxable.

Estimated Payments. Our tax system is pay-as-you-go. If taxes aren’t being withheld you may need to pay estimated tax payments.

Even though formal IRS audits are down, the IRS computers match the informational tax returns filed to the tax return with that same identification number. For more information go to www.irs.gov website. If your small business starts creating a tax liability consider using a tax professional. For a “free discovery” meeting, call us at 920-351-4842 to see if we are the right fit for you.

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