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IRS advises taxpayers in the sharing economy on how to meet their tax responsibilities
In a newly launched web page, the “Sharing Economy Resource Center”, IRS has provided guidance to taxpayers involved in the sharing economy (also called the on-demand, gig or access economy) to help them quickly locate the resources they need to satisfy their tax obligations.
Background. IRS notes that an emerging area of activity in the past few years has changed how people commute, travel, rent vacation places and perform many other activities. The sharing economy allows individuals and groups to utilize technology advancements to arrange transactions to generate revenue from assets they possess. Typically, the Internet is used to connect suppliers willing to provide services or the use of assets—apartments for rent, cars for transportation services, etc.—to consumers. These platforms are also used to connect workers and businesses for short-term work, 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.
New guidance. IRS notes that if a taxpayer receive income from a sharing economy activity, it’s generally taxable. This is true even if the taxpayer even didn’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. There is likely a tax obligation even if the taxpayer pursued this activity as a side job or as a part time business and even if the taxpayer was paid in cash. On the brighter side, depending upon the circumstances, some or all of the taxpayer’s business expenses may be deductible, subject to the normal tax limitations and rules.
IRS has provided guidance to taxpayers with the release of its new “Sharing Economy Resource Center” webpage