The Sharing Economy

Posted on Posted in Individual

by Caroline Delaney |  Senior Accountant

What to expect at tax season if you earn income from Airbnb, Uber, Lyft, Turo, etc.

Renting out your house, condo, apartment, or mobile home on Airbnb

Renting out a vacation property to others can be profitable. If you do this, you must normally report the rental income on your tax return. You may not have to report the rent, however, if the rental period is short and you also use the property as your home. Here are some tips that you should know:

Schedule E - You usually report rental income and rental expenses on Schedule E, Supplemental Income and Loss. Your rental income may also be subject to Net Investment Income Tax. 

Used as a HomeIf the property is “used as a home,” your rental expense deduction is limited. This means your deduction for rental expenses can’t be more than the rent you received.

Divide Expenses - If you personally use your property and also rent it to others, special rules apply. You must divide your expenses between rental use and personal use. To figure how to divide your costs, you must compare the number of days for each type of use with the total days of use. 

Personal Use - Personal use may include use by your family. It may also include use by any other property owners or their family. Use by anyone who pays less than a fair rental price is also considered personal use. 

Schedule A - Report deductible expenses for personal use on Schedule A, Itemized Deductions. These may include costs such as mortgage interest, property taxes and casualty losses. 

Rented Less than 15 Days - If the property is “used as a home” and you rent it out fewer than 15 days per year, you do not have to report the rental income. In this case you deduct your qualified expenses on Schedule A. 

 

Earning income from Uber, Lyft, Turo, and other ride-sharing companies

Individuals who earn income from these ride-sharing companies are usually considered independent contractors, which has self-employment tax implications.  When you receive a payment from one of these services, no taxes have been taken out.  You must be aware that you are responsible for paying federal and state income taxes as well as Social Security and Medicare on your earned income. 

During tax season, you will not receive a W-2 from the ride-sharing company you work for, you will be receiving a Form 1099.  You’ll report your self-employment income and expenses on Schedule C of your Form 1040.  You will also need to fill out Schedule SE for self-employment tax if you earn more than $400. 

You are able to deduct the expenses related to your ride-sharing income including gas, oil, repairs, insurance, maintenance, depreciation, and lease payments.  However, if you use your vehicle for personal use and ride-sharing, you can only deduct the portion of your expenses that directly relate to your ride-sharing earnings.  Keep track of all your deductions by saving receipts, mileage logs, and any other relevant documentation.