8 Last-Minute Deductions for Sharing Economy Participants

If you are self-employed or a member of the sharing economy, congratulations on empowering yourself and going at it on your own.

You have freedom, flexibility and may even work in your fuzzy slippers! But remember, now you also have extra tax filing requirements.

"Even if you're doing it part-time, you must approach this as if you're running a business," says Mark Luscombe, principal analyst at Wolters Kluwer, a tax and accounting services company.

Because you are. And the IRS knows it - and finally gets it. The agency recently created a Sharing Economy Tax Center on the site, because it knows that a third of the workforce is some sort of freelancer or does something to partake in the new sharing economy.

So as you sit down to finally prepare your return, here are eight last minute things you need to remember. And with all things tax-related, make sure you have the documentation and receipts to back everything up.

For even more tax tips, check out TheStreet's Tax Center

1. File a Schedule C
1. File a Schedule C

If you are earning money from an activity -- whether it's driving for Lyft or selling cookies out of your house -- you are running a small business and need to file a Schedule C - Profit or Loss from Business. Even if you work on a part-time basis. This form encapsulates all your income and expenses and determines how much tax you will owe.

Use an online preparation program that will walk you through and the nuances of the form to ensure you pay the least amount of tax.

2. File a Schedule E for Airbnb
2. File a Schedule E for Airbnb

If you are a host for Airbnb and any other site like that, you may need to file Schedule E - Supplemental Income and Loss to report income from renting your place out, says Luscombe. 

Schedule E also lets you report a proportional amount of the costs you pay to upkeep your home, so make sure you take your time with this form.

3. Report the Income from Form 1099-K
3. Report the Income from Form 1099-K

If you sold goods and/or services and took payment from a third party, like a credit card or PayPal, you are required to receive a 1099-K Payment Card and Third Party Transactions if your gross payments exceed $20,000 and you had more than 200 such transactions, says Annette Nellen, director of the graduate tax program at San Jose State University.

But know that even if you only made $5,000 and had 50 transactions, that income is still reportable, and therefore taxable.

So just because you didn't get a 1099-K, doesn't mean you're off the hook -- which is why many companies will send you a 1099-K, regardless of the amount. 

And our bet is that threshold requirement will go the way of the dodo bird next year.

4. Tally All Your Business Expenses
4. Tally All Your Business Expenses

All of them! This is one of the beauties of being self-employed - any money you spend to do business can be deducted, so really take the time to think this through -- especially if this is your first year with your own business. And again, this is where the online tax preparation products come in handy. Many have products, like TurboTax Self Employed or TaxEdge by H&R Block, are geared specifically to the self-employed and sharing economy and will help you account for everything.

And if you didn't keep good records in 2016, this exercise will let you know what to keep track of going forward, says Nellen.

5. If You're a Driver, Deduct Your Car Expenses
5. If You're a Driver, Deduct Your Car Expenses

If you drive to make money and you only have one car, the first thing you need to do is split your personal expenses. 

Then hopefully you wrote down your car's odometer amount at the beginning of the year and then again at the end. Then, using the IRS's simplified method, you can multiply your 2016 business miles by 54 cents. It is a fixed amount that attempts to calculate how much gas, insurance and depreciation would cost per mile.

You also can add the costs of your parking and tolls. But all this adds up, so try to be as accurate as possible.

6. Take the Home Office Deduction If You Really Have One
6. Take the Home Office Deduction If You Really Have One

If you legitimately have a home office - that means you have a room in your home that is only used for work - the IRS offers a simplified method again and will allow a deduction of $1,500. 

"In in my view, though, that easy calculation is not that generous," says Luscombe, who suggests you go through the exercise of tallying all the costs of your home -- like rent, maintenance, mortgage interest, real estate taxes (presuming neither are reported as itemized deductions), heating, cable, etc. -- and take a percentage of them all based on the square footage of the space. 

Check out Publication 587 - Business Use of Your Home for more details.

7. Make Estimated Tax Payments
7. Make Estimated Tax Payments

You've probably realized by now that much of your self-employed income did not have taxes withheld, like your W-2 income does. So going forward, you will need to make estimated tax payments each quarter, because the IRS likes to be paid throughout the year.

Your online software program or tax preparer can help you figure out how much you need to pay in each quarter. But this is one of the bummers of being self-employed -- you need to send Uncle Sam a check every three months. 

Publication 505 - Tax Withholding and Estimated Tax will have all the details. 

8. Learn for Next Year!
8. Learn for Next Year!

Preparing your 2016 return is an awesome learning tool for 2017, says Nellen. Now you will know what needs more documentation and what else you need to keep track of. What's more, you will have a good ballpark of what you will owe in taxes as a self-employed person. 

And while all this may seem onerous - don't let it overshadow the fantastic perks of being your own boss.

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