There are six things taxpayers should know about how the sharing economy might affect their taxes.
- The activity is taxable: Sharing economy activity is generally taxable, even when:
- The activity is only part time;
- The activity is something the taxpayer does on the side;
- Payments are in cash;
- The taxpayer receives an information return like a Form 1099 or Form W2.
2. Some expenses are deductible: Taxpayers who participate in the sharing economy may be able to deduct certain expenses.
3. There are special rules for rentals: If a taxpayer rents out their home or apartment, but also lives in it during the year, special rules generally apply to their taxes.
4. Participants may need to make estimated tax payments: The United States tax system is pay-as-you-go. This means that taxpayers involved in the sharing economy often need to make estimated tax payments throughout the year. These payments are due on April 15, June 15, September 15 and January 15.
5. There are different ways to pay.
6. Taxpayers should check their withholding: Taxpayers involved in the sharing economy who are employees at another job can often avoid making estimated tax payments by having more tax withheld from their paychecks.
If you need tax help, contact our law office at 816-524-4949 or visit our website at Hoorfarlaw.com