It’s the most wonderful time of the year … wait, scratch that, it’s tax day.
Taxes are difficult enough without having to figure out how payments to and from Uber, Airbnb and TaskRabbit fit into the equation. If you took part in the sharing economy in 2014, here are some tax tips you need to know.
If you used the services
- You may be able to write it off. If you used services like Airbnb or Uber while traveling for work, you may be able to write those expenses off. But you may not deduct regular commuting expenses — for example, a daily Uber ride to the office — if you work outside the home, as the IRS considers that a personal commuting expense.
- You may owe “nanny tax.” If you paid more than $1,900 in a calendar year, or $1,000 in a quarter, to a person who works in your home, you may owe what’s referred to, somewhat misleadingly, as the “nanny tax.” This tax actually applies to any household employees, even part-time babysitters or cleaning professionals, as long as they are paid enough and fit the IRS’s definition of an employee – a definition that’s probably different from yours. As an employer, you’d have to withhold taxes from them and pay taxes for them. Read more at Care.com.
If you provided the services
- You must report all of your earnings to the IRS. You may have read that if you earned less than $600 in the year, you don’t have to report it. Well, the IRS doesn’t think so. They want their money, so they want you to report everything you made. Comply by filing a Form 1040 Schedule C or a Schedule C-EZ, even if the amount is less than $600. Your state and local governments might feel the same way, so check with them, too.
- … Unless you made money by renting out your home for fewer than 15 days. Report income earned from renting out your primary residence only if you did so for more than 14 days. In that case, the IRS also lets you deduct relevant rental expenses.
- … And remember that you may have to pay hotel taxes. This depends on where you live, so check your state and local tax laws.
- You must report earnings even if you didn’t receive a 1099. A business is required to send you a 1099-MISC if they paid you more than $600 in the year or a 1099-K if they paid more than $20,000. But report income even if you didn’t receive a 1099. If you filled out a W-9, your taxpayer information is on file and the IRS will expect to see the income on your return.
- Your 1099 may look wrong at first. Don’t be surprised if your 1099 shows a larger amount of money than the amount you took home. A 1099 from Uber, for instance, may include bridge tolls and safe-ride fees — money you never saw — which could add up to a lot. Go ahead and report the full amount on the 1099.
If you have questions about your tax forms, reach out to an accountant. Questions about your agreement contract with any of these companies? You can speak to a highly reviewed employment / labor lawyer on the phone in minutes, with the $39 Avvo Advisor service. Download the Avvo Advisor App and, for a limited time only, use promo code Nakedlaw to get a free Advisor session.
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For more information, read up on how each service is handling tax information for their contractors:
