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

In Financial planner Schaumburg have only used these types of services (and not provided them), plus there is no need to worry about the tax implications but when you’ve rented out a spare room in your own home through a company like Uber or Airbnb then you’re probably collecting a fee–a percentage of which goes to the provider (on this example, Airbnb) plus a portion that you simply 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 should be mindful of the tax consequences.

Millennials will be the number 1 people that use the sharing economy but Gen X and Boomers put it to use too; plus a recent PWC study discovered that 24 percent of boomers, age 55 and older, are also providers. While many individuals are trying to earn some extra money, some dive into it full-time hoping they could earn an income, and still, others simply enjoy meeting new people or providing a service that assists people. What many people don’t realize is this fact extra money could impact their taxable income–especially should they have a full-time job with an employer.

In other words, that extra income might become a tax liability once you find out your goverment tax bill. To avoid surprises at tax season, it’s more essential than in the past to become proactive in understanding the tax implications of one’s new sharing economy gig and speak with a reliable tax professional.

Tip: For those who have a job within a company ensure that your withholding reflects any extra income derived from your side gig (e.g. boarding pets at your house through Rover or driving to get a ride-share company like Uber on weekends). Use Form W-4, Employee’s Withholding Allowance Certificate, to make any adjustments and submit it to your employer who will utilize it to work how much federal tax to become withheld from pay.
Start up business Owner
When you may well not necessarily think of yourself being a newly self-employed business owner, the government does. So, even when you work through an organization like Airbnb or Rover, you are considered an entrepreneur and so are in charge of your own personal taxes (including paying estimated taxes if you want to). It’s up to you to maintain tabs on income and expenses–and of course, to help keep good records that substantiate your income and expenses (more about this below).

Note:In the event you receive income from your sharing economy activity, it’s generally taxable even if you don’t be given a Form 1099-MISC, Miscellaneous Income, Form 1099-K, Payment Card and 3rd party Network Transactions, Form W-2, Wage and Tax Statement, as well as other income statement.

And today, for your very good news. Like a business owner, you’re entitled to certain deductions (susceptible to special rules and limits) that you cannot take as a possible employee. Deductions decrease the level of rental income that’s subject to tax. You might also be able to deduct expenses directly related to enhancements made just for the comfort of your invited guests. As an example, in the event you rent a room in your apartment through Airbnb, amounts you spend on window treatments, linens, or possibly a bed, could be deductible.

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