Drove for Uber? Here are some tax tips
NEW YORK (AP) — If you're driving for Uber or renting out a room through Airbnb to make some extra cash, don't forget — you likely need to pay taxes on what you earned, even if it's a part-time gig.
Unlike full-time jobs, where taxes are automatically withheld from every paycheck, it's usually up to freelance workers to keep records and put aside money to eventually pay the IRS. And since the IRS considers on-demand workers to be self-employed, it also helps to keep track of expenses that can help reduce your tax bill.
NO FORMS DOESN'T MEAN NO TAXES
You may not receive a form at the end of the year listing everything you earned. That doesn't mean you can skip paying taxes. You may owe the government on what you earned and could get in trouble if you don't pay.
Those earning money through on-demand apps such as Uber or Lyft need to report the income on a Schedule C form, says Fred Slater, a certified public accountant and principal at MS 1040 LLC in New York. And if you used Airbnb or other home-renting sites to bring in income, use Schedule E.
Any money you made is easily traceable since transactions take place online. "You'd be nuts not to report it," Slater says.
PAY TAXES EVERY QUARTER
Typically, you'll need to pay taxes every three months throughout the year. Making those payments can prevent you from having to send one big sum to the IRS at the end of the year. Known as estimated tax payments, they're due on April 15, June 15, Sept. 15 and Jan. 15. The IRS website has more information on estimated taxes and how to figure out how much you need to pay. It's at https://www.irs.gov/ businesses/small-businesses-self-employed/
If you have a separate full-time job that already deducts taxes out of your paycheck, the IRS says you can ask your employer to increase your tax withholdings to also cover on-demand gigs. You would need to give your employer a W-4 form and indicate how much more to withhold, according to the IRS.