Uber, Lyft, Airbnb, Etsy, Rover, TaskRabbit. In case you have used any of these services–or provided services so they can others–you’re part of the sharing economy.

If you’ve only used these services (and never provided them), plus there is you should not be worried about the tax implications however, if you’ve rented out an extra room in your own home through a company like Uber or Airbnb you happen to be probably collecting a fee–a percentage of which goes towards the provider (in this example, Airbnb) plus a portion which you keep for providing the service. But whether it’s your full-time gig or perhaps a part-time job to make some extra cash, you need to be aware of the tax consequences.

Millennials will be the number one people that use the sharing economy but Gen X and Boomers use it too; along with a recent PWC study found out that 24 percent of boomers, age 55 and older, may also be providers. While Sales tax audit are seeking to earn a bit of more income, some dive involved with it full-time hoping they could make a living, yet still, others simply enjoy meeting new people or providing a site that assists people. What most people don’t get is that this supplemental income could impact their taxable income–especially if they have a full-time job within a company.

Put simply, that more income might are a tax liability once you figure out your goverment tax bill. To avoid surprises at tax season, it’s more important than ever before being proactive understand the tax implications of your new sharing economy gig and seek the advice of a reliable tax professional.

Tip: For those who have work with an employer ensure that your withholding reflects any other income derived from your side gig (e.g. boarding pets at your home through Rover or driving for a ride-share company like Uber on weekends). Use Form W-4, Employee’s Withholding Allowance Certificate, to create any adjustments and submit it in your employer that will utilize it to work how much federal taxes to be withheld from pay.
Start up business Owner
As you may well not necessarily think about yourself being a newly self-employed business proprietor, the government does. So, while you process a company like Airbnb or Rover, you are considered a business person and therefore are responsible for your own taxes (including paying estimated taxes if you wish to). The choice is yours to keep tabs on income and expenses–and of course, to help keep good records that substantiate your earnings and expenses (read more about this below).

Note:If you receive income from the sharing economy activity, it’s generally taxable even though you don’t get a Form 1099-MISC, Miscellaneous Income, Form 1099-K, Payment Card and Alternative party Network Transactions, Form W-2, Wage and Tax Statement, or some other income statement.

And today, for the great news. As a company owner, you’re eligible for certain deductions (at the mercy of special rules and limits) that you cannot take being an employee. Deductions decrease the level of rental income which is at the mercy of tax. You could also be able to deduct expenses related to enhancements made just for your invited guests. For example, if you rent out a room within your apartment through Airbnb, amounts you spend on draperies, linens, or perhaps a bed, could possibly be deductible.

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