The Shared Economy & Taxes… 5 Things You Need to Know!

A quickly growing area of our business economy is the online “on-demand!” sector.  On-demand entrepreneurs can offer a wide range of services in the shared economy. This is anything from a car ride such as Uber to a home for rent on Airbnb with the click of a button on a phone app. As the July 15 tax deadline approaches, there are several important things for these up and coming tycoons to keep in mind when they file:

  1. If you earn any income via the shared economy, whether it be cash-only, part-time, or full-time, it will most likely be taxable.
  2. The plus side is that most of your business expenses can be tax-deductible!  Some of these expenses include cell phones, tolls, and gas used towards your venture.
  3. Depreciation, or “wear and tear”, on your home and vehicles can be claimed for times when they are utilized for business needs.
  4. Take the time to determine whether you are considered an employee, self-employed, or an independent contractor.  It will make a difference in your taxes!
  5. Home rentals must be claimed on your income tax return.  Fortunately, that also allows for the possibility of more deductions in the forms of mortgage interest, maintenance, and utilities.

These tips are just a few of many provided by the IRS to those providing on-demand goods or services.  More helpful links and ideas can be found at Sharing Economy Tax Center .

ITP Taxes provides income tax preparation services for individuals and small businesses. Dave Shiley founded ITP Taxes after leaving one of the largest national tax preparation chains, with the goal of providing Central PA residents a friendlier and more personalized experience.