With more people engaged as freelancers and independent contractors, the IRS has launched a new online Gig Economy Tax Center.
"The IRS developed this online center to help taxpayers in this emerging segment of the economy," said IRS Commissioner Chuck Rettig.
"Whether renting out a spare bedroom or providing car rides, we want people to understand the rules so they can stay compliant with their taxes and avoid surprises down the line."
The gig economy is that part of the labor market employing people through short-term contracts or freelance work rather than permanent jobs.
For many, it's a small portion of their income.
It includes businesses that run an app or website to connect customers to services.
More popular factions of the gig economy are ride-sharing and home rental businesses.
Rettig said it's vital that gig economy workers understand their tax obligations as many don’t get W-2 or 1099 forms, or other information returns for their work in the gig economy.
Income from these sources is generally taxable, regardless of whether workers receive information returns.
This applies to full- and part-time work, and if the person is paid in cash.
Workers may also be required to make quarterly estimated income tax payments, and pay their share of FICA, Medicare, plus additional Medicare taxes if they are employees, and pay self-employment taxes if they are not considered employees.
The online center houses various resources, making it easier for taxpayers to find information about tax obligations for the companies that provide the services and the individuals who perform them.
Among the tips it offers are:
- Filing requirements
- Making quarterly estimated income tax payments
- Paying self-employment taxes
- Paying FICA, Medicare, and additional Medicare
- Deductible business expenses
- Special rules for reporting vacation home rental