With the growth of the “sharing economy” involving organizations like Uber and Airbnb, the IRS has determined there is a need for guidance for individuals who are involved in providing such services.
Many of these individuals have not previously operated a business, nor may they even realize that they truly are operating a business that will trigger special tax issues and obligations.
As the IRS describes the issue on their site:
An emerging area of activity in the past few years, the sharing economy has changed how people commute, travel, rent vacation places and perform many other activities. Also referred to as the on-demand, gig or access economy, sharing economies allow individuals and groups to utilize technology advancements to arrange transactions to generate revenue from assets they possess - (such as cars and homes) - or services they provide - (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
To assist these individuals the IRS has created a Sharing Economy Tax Center on their website.
The site contains information and links related to the following items:
- Issues for Individuals Performing Services
- Filing Requirements
- Employee or Independent Contractor
- Tax Payments, Including Estimated Tax Payments
- Self-Employment Taxes
- Rules for Home Rentals
- Business Expenses
- Employment Tax Issues for the Companies Providing Services
- Determining Whether the Individuals Providing Services are Employees or Independent Contractors
- Employer/Payer Employment Tax Obligations
This site can provide a useful resource both to refer clients to who have begun offering services via providers such as Uber, Lyft, etc. and for advisers to understand issues that arise and the IRS’s view on the handling of such issues.