In today’s world, there are many ways to earn a little extra money. One is through participating in the sharing economy through things like selling goods or services via one’s computer or cellphone.
Participating in the sharing economy can provide some interesting income opportunities. However, it is important to remember that engaging in these activities also has responsibilities connected to it. This includes tax responsibilities.
Most income from sharing economy activities is considered taxable. What a person does when it comes to tax issues connected to sharing economy income they earned can be very impactful. Some types of conduct on this front could result in a taxpayer facing tax penalties or significant scrutiny from the IRS. When facing such consequences, it can be important to seek out quality legal guidance on navigating the matter.
One thing that could lead to a person facing tax trouble in connection to the sharing economy is failing to report taxable income they received from their activities. So, accurately reporting taxable sharing economy income one has earned can be very important.
A person could also face tax trouble if they are accused of not paying enough in taxes over the course of the year, given what they earned from the sharing economy. So, along with properly reporting income, another step that can be an important one in steering clear of tax trouble in connection to involvement in the sharing economy is making sure one is paying enough in taxes over the course of the year to avoid tax penalties.
An article the IRS recently put up on its website notes two of the main routes taxpayers could take on this front. These routes are:
- If they have a job in which they have tax withholding, adjusting their withholding to account for additional income they are earning through the sharing economy.
- Paying estimated taxes on their sharing economy income over the course of the year.