The Internal Revenue Service debuted a new
The gig economy, also referred to as the sharing, on-demand or access economy, typically involves businesses that offer an app or website to connect workers to provide services to clients. While there are many types of businesses in this facet of the economy, ride-sharing services and home rentals are among the most popular.
“The IRS developed this online center to help taxpayers in this emerging segment of the economy,” said IRS Commissioner Chuck Rettig (pictured) in a statement. “Whether renting out a spare bedroom or providing car rides, we want people to understand the rules so they can stay compliant with their taxes and avoid surprises down the line.”
The IRS is making a priority of educating gig economy workers about their tax obligations because many people don’t receive form W-2s, 1099s or other information returns from companies in the gig economy. However, income from these sources is generally considered to be taxable by the IRS, whether or not workers receive information returns. That applies whether the work is full-time, part-time or if the person is paid in cash. Workers may also need to make quarterly estimated income tax payments, pay their share of Federal Insurance Contribution (FICA), Medicare and Additional Medicare taxes if they are employees and pay self-employment taxes if they are not considered to be employees.
The Gig Economy Tax Center encompasses various resources so taxpayers can locate information about the tax implications for the companies that offer the services and the individuals who do them.
It provides tips and resources on topics including:
- filing requirements;
- making quarterly estimated income tax payments;
- paying self-employment taxes;
- paying FICA, Medicare and Additional Medicare;
- deductible business expenses; and
- special rules for reporting vacation home rentals
