Jun 192017

New York. forbes.com

If you rent out a room to others using AIrbrib or a similar site, if you drive your car for Uber, or if you otherwise take part in the sharing economy, the money you earn may be taxable. Even if you get apid in cash withut any record of the transaction you still may be liable for income tax on the earnings. Recently the IRS issued a Tax Tip 2017-39 which addressed the sharing economy and taxes. Given that these transactions are often a minor side action for a lot of participants, some folks may not realize that this income is taxable.

This is true whether this is a one time thing or if you treat it like a side gig. Plus, if you don’t earn cash but rather get something else of value in return, there is likely taxable income on the transaction. Here are some p ointers on the sharing economy.

What’s taxable. Sharing economy activity is generally taxable. It does not matter whether it is only part time or a sideline business, if payments are in cash or if an information return like a Form 1099 or Form W-2 is issued. The activity is taxalbe. Business Expenses. 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 54 cents per mile for 2016.

Where you live. If a taxpayer rents out his home, apartment or other dwelling but also live sin it during the year, special rules generally apply. For more see publication 527. Estimated payments. The U.S. tax system is pay as you go. This means that taxpayers involved in the sharing economy often need to make estimated tax payments. Use form 1040-ES to figure these payments.

  •  06/19

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