The IRS calls it economy sharing. As a layman, I had never heard the term so it really caught my attention. Economy sharing is an economic system in which goods and services are shared between individuals for free or for a fee. It is likely we are all participants in economy sharing. A few weeks ago, I spent a couple of days in Las Vegas in a home rented through Airbnb website. Getting rid of unneeded household items and tools has been much more lucrative this summer as I’ve taken pictures of each item and placed it on a local website like Cache Valley Classifieds or KLS. I love snow cones and often stop by a favorite shave ice joint for a refreshing treat. Yes, these are all examples of economy sharing.
A little extra money in any season is always nice, but you need to remember that sharing economy activity is generally taxable. These activities include part-time work, a side business, cash payments received, income stated on a 1099 or W-2 (IRS Tax Tip Number 2018-104).
As an employee participating in the sharing economy, you may want to review your withholding (Form W-4) for that and any other job. If you aren’t sure what withholdings you should have – you can use the Withholding Calculator on the IRS.gov. This tool helps you determine if you need to adjust the tax withheld from your income. Ideally you don’t want too much or too little withheld; you want it just right.
As a tax payer, not an employee, earning extra money the IRS allows you to “pay as you go” so you don’t owe. Making estimated tax payments eases the burden of having to pay all at one time. Make such payments through IRS Direct Pay or enroll in the Treasury Department’s EFTPS (Electronic Federal Tax Payment System).
As payroll and QuickBooks professionals, we can help advise you on payroll and accounting matters or help set you up for estimated tax payments through EFTPS. We at Stapley Accounting are dedicated to helping you with all your accounting, payroll, and QuickBooks needs. Reach out today at 435-294-0030.