With the increasing popularity of companies like AirBNB, Uber, Zipcar, and Lyft, it’s clear that nothing can stop the growth of the sharing economy. Since AirBNB has launched, it has hosted over 400 million guests, and Uber currently has over 75 million riders. If you make under $600 a year as an Uber driver or you only rent your home out for up to 14 days, you don’t have to report your income. However, if you do make over $600 a year with Uber or if you rent your home out on AirBNB for over 14 days in a year, you have to report any income and also pay taxes on it.
It’s clear that services like AirBNB and Uber aren’t going anywhere. These services can be used in many different ways. For example, here in Atlanta, the film and television industry is booming, and many people are renting their homes out to actors and/or crew through AirBNB. These locations can sometimes even be used as film locations. And services like Uber have branched out into services like UberEats, a food delivery service.
When you drive for Uber or rent your home out for AirBNB and you make over $600 in a year or rent your home out for longer than 14 days, you are considered an independent contractor or self-employed. You are expected to pay taxes quarterly. Here is a quick tax checklist for these “gig economy” services.
Taxes can get complicated for the self-employed. There is so much to keep up with. And with more and more people driving for Uber, renting their homes out with AirBNB, or participating in the sharing economy through apps like ZipCar, Lyft, UberEats, or DoorDash, there are now more self-employed individuals than ever before. So how can you be sure you are paying all the right taxes at the right times? How can you avoid penalty fees or outlandish interest charged by the IRS?
The best thing to do is to have a tax professional help you with your taxes. This does cost some money, but if you consider the alternative, you will be saving money in the long run. First of all, a tax professional can help you claim as many deductions as possible and get you down to the lowest amount of legal taxes. A tax professional can also help you to avoid any penalty fees, which can become costly in the long term.
Services like AirBNB and Uber have really disrupted the system, and they offer opportunities to everyone. You do need to make sure you are paying the right taxes, though. And the best way to do that is to hire a highly qualified tax professional.