What is a Sharing Economy and how might it affect your taxes?
According to Wikipedia, a Sharing Economy is, "an umbrella term with a range of meanings, often used to describe economic and social activity involving online transactions." Think Uber, Lift or Airbnb.
So, if you rent a spare bedroom or provide car rides, you may be involved in the sharing economy. According to the IRS, it's "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."
How might this affect your taxes?
Again, according to the IRS, "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."
Business Expenses may be deductible.
Depending upon the circumstances, some or all of your business expenses may be deductible, subject to the normal tax limitations and rules.
What are the potential tax issues?
The IRS provides the following information for those that work in this Sharing Economy at this link:
The link provides information for Individuals or Companies that perform these services covering topics such as filing requirements, self-employment taxes, business expenses and more.
Have questions about your sharing economy business? Click the link above or arrange a consultation with your Tax Advisers or professional tax preparers.
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