January 14, 2020
If you’re working in the gig economy, it pays to know your tax obligations, states the IRS. They suggest pre-planning to ensure you are prepared when it’s time to file your tax return.
Just like any other job, money earned through the gig economy is taxable. If an individual or business makes money from a gig economy activity, it’s generally taxable. Even if the taxpayer does not receive a Form 1099-MISC, Form 1099-K, W-2 they must report it.
What is a gig economy activity? Many types of earnings are considered a “gig economy” activities. Because today’s virtual marketplaces host online selling, buying, and trading of services the IRS defines more rules. Selling your household items or personal services on Facebook Marketplace and drop-shipping counts as income to report.
Therefore, if the activity online earns you money the IRS expects you to report on the taxpayers’ return. The IRS reminds taxpayers you must claim it and pay taxes owed on the earning or sale in this latest alert in e-news for taxpayers. The IRS suggests following these steps below.
Here are a few things you can do to throughout the year to avoid surprises at tax time:
- Pay your taxes as you go.
- Keep good records.
- Check your Withholding now
More information is available at Gig Economy Tax Center on IRS.gov.