So you’re making money in the sharing economy. Maybe you’re renting a room through Airbnb, organizing meals on one of many social dining sites, crowdfunding on Kickstarter, or sharing your car through RelayRides. This is great, but what happens when April rolls around and taxes are due? How is that money reported? Does it get reported? What write-offs you can take? Suddenly, things get a little blurry.
A new website, 1099, aims help. An open source site created to provide tax and accounting information for the sharing economy, 1099 is a “crowd-sourced repository” of information for self-employed workers and people getting side income from sharing platforms.
The fact is, there are 42 million freelancers in the U.S. and new sharing movement members every day. As self-employed individuals, dealing with income and taxes is up to us. And, as the self-employed get audited more than company employees, it’s important to keep all of your financial ducks in a row.
The idea behind 1099, which is an initiative of the Collaborative Fund, is that tax stuff can be confusing but that tax and accounting experts can help us through the maze. We can then leave an information trail for the next person in the same situation. Described by its creators as a rough draft, 1099 is a first step in starting the sharing economy tax and accounting conversation.
Crowd involvement is a crucial part of the 1099 plan. The more people participate in building the site with questions and responses, the richer, more informative and valuable it will become. Below are some sample questions (click through to see the answers) that have already been answered to give you an idea of where 1099 is headed.
- I have generated a small amount of income from utilizing resources in the sharing economy. Do I need to report and pay taxes on this income?
- Are Kickstarter, Indiegogo or other crowdfunding pledges considered charitable contributions?
- I have reached a crowdfunding project goal. What are the next steps I need to take?
- I plan to use my recent crowdfunding capital as a first step in building a company and am interested in pursuing equity funding in the future. What type of company should I create?
- I am renting out a part of the home in which I live. Do I need to report income received from this rental?