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Getty Images/iStockphoto The IRS is rolling out guidance and tax tips on gig work.
Are you an Uber driver puzzled about whether mileage between pick-ups and drop-offs counts as tax deductible? Is there any write-off for the money you spend on cleaning the room you rent on Airbnb?
The Internal Revenue Service wants you to know it has answers — so it can collect on your taxes.
The IRS launched a Gig Economy Tax Center site this week in an effort to clear up tax questions. Anyone who has net earnings of at least $400 through their gig work is required to file a tax return, according to the IRS. (Net earnings are the income left over after expenses are subtracted.)
The site has links on business expenses, record keeping and rental income. It also has a pay portal so gig workers can pay their quarterly estimated taxes along the way, instead of getting hit with a tax bill at filing season.
See also: What the IRS doesn’t tell you about self-employment taxes
The government might not have a true tally on the number of self-employed gig workers in America, but it does have an eagle eye on the difference between what some gig workers make and what they pay on their returns.
Around 15% of an estimated $458 billion annual tax gap (the money the government could collect, but doesn’t) comes from non-filing and under-reporting of self-employment income, the Treasury Inspector General for Tax Administration said last year, estimates from 2008 to 2010.
“The gig economy has since emerged and grown considerably, with thousands of new taxpayers each year being responsible for self-employment taxes,” the inspector general said.
There are approximately 57 million freelance workers in America, according to Upwork, a job hiring platform for freelancers and employers, and the Freelancers Union, a nonprofit organization that represents independent workers’ interests.
The IRS’s new web resources are a welcome addition because many people aren’t aware of the various tax issues involved in working in the gig economy, said Garrett Watson, senior policy analyst at the Tax Foundation, a right-leaning think tank.
“It’s great to see the IRS is realizing education is a major part of this,” Watson said.
For example, if people make money as drivers for companies like Lyft LYFT, +1.13% or Uber UBER, +0.12%, they might not realize they can choose between a standard rideshare deduction (57.5 cents per mile) or they can track their expenses, he said.
They also might not know that between a drop-off and a pick-up, a driver’s search for the next passenger counts as deductible mileage, but it’s less clear whether the start-of-shift commute to the passengers is deductible.
“We want to ensure that all Lyft drivers get the information they need to complete their taxes effectively and efficiently,” a spokeswoman for the company said. He said the company has a site dedicated to helping its workers through tax season, “including special savings on tax filing.” During tax season, she said the company would be holding events with tax experts at local driver hubs and service centers.
(Uber and Airbnb did not respond immediately to a request for comment.)
Room rentals present other questions, he said. Expenses to clean a rented room are deductible, but not other parts of the property. As for shared spaces like living rooms, that’s a judgment call, he said.
Of course, the IRS isn’t the only resource out there giving guidance on gig economy tax issues. But the IRS says even more information is “vital” because, while many gig workers don’t get W-2s, 1099s or other tax documents, their pay is “generally taxable.”
That goes even if someone is paid in cash, the agency noted. “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,” IRS Commissioner Chuck Rettig said in a statement.
