Year-end Pointers for the Sharing Economy
by Susannah McQuitty
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AirBNB, Uber, Lyft – you’ve heard of them, and you’ve probably heard that they are a part of the growing sharing economy, but what you might not know is that you could be working in the sharing economy yourself without knowing it. How can you tell? If you lend your personal assets to draw an income, you are considered part of the sharing economy.
Working in the sharing economy is a lot like being self-employed, but it can be tricky to spot, because we think of being self-employed as running a business, while sharing a ride or any other resource seems more of a side hustle.
Since the end of the year is just around the corner, it’s time to round up your statements and records to start prepping for January, so you’re ready to file your taxes and get that tax refund pronto.
Get your records together
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, 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.
Surprised? Don’t panic. The first step is to see just how much money you made. Bank statements are usually pretty easy to access online, and even cash payments can be tracked if you charge a particular rate for a service. Gather as much information as you can for the year, and you’re ready to start hunting deductions.
Read up on your deductible expenses
Depending on your circumstances, some or all of your business expenses may be deductible. I say “business,” but don’t be confused: business expenses simply refer to any money you spend on an activity that generates income. So, if you work as a car-share driver, you can deduct your gas expenses. That means you’ll have less taxable income and less money owed in taxes, so the more deductions you qualify for, the more money you save. You can learn more about deductible business expenses and what it takes to qualify by taking a look at our Tax Guide.
Estimate your tax liability
So now that you’ve got everything in one place and have looked at all the different deductions you could take, you’re ready to estimate how much tax you’ll owe or how much you’ll get in refund money when you file. Our Tax Refund Estimator is available online or through the App Store and Google Play, and after a few simple questions, you’ll have a pretty good idea of how much you’ll be getting back.
Taxes for workers in the sharing economy can be complicated, so gathering up your records and getting your numbers straight before the end of the year is a great idea. Doing the grunt work on the front end will not only reduce your risk for an audit but also make preparing and filing your taxes that much easier.
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