Sign up for our FREE Monthly Email Newsletter
In addition to keeping in the financial know, you may be interested in checking your credit score and report.
¹The credit scores provided under the offers described here use the Equifax Credit Score, which is a proprietary credit model developed by Equifax. The Equifax Credit Score and 3-Bureau scores are each based on the Equifax Credit Score model, but calculated using the information in your Equifax, Experian and TransUnion credit files. The Equifax Credit Score is intended for your own educational use. It is also commercially available to third parties along with numerous other credit scores and models in the marketplace. Please keep in mind third parties are likely to use a different score when evaluating your creditworthiness. Also, third parties will take into consideration items other than your credit score or information found in your credit file, such as your income.
²The Automatic Fraud Alert feature is made available to consumers by Equifax Information Services LLC and fulfilled on its behalf by Equifax Consumer Services LLC.
³Equifax Credit Report Control™ is only available while you have a current subscription to Equifax Complete Premier. Locking your credit file with Equifax Credit Report Control will prevent access to your Equifax credit file by certain third parties, such as credit grantors or other companies and agencies. Credit Report Control will not prevent access to your credit file at any other credit reporting agency, and will not prevent access to your Equifax credit file by companies like Equifax Personal Solutions which provide you with access to your credit report or credit score or monitor your credit file; Federal, state and local government agencies; companies reviewing your application for employment; companies that have a current account or relationship with you, and collection agencies acting on behalf of those whom you owe; for fraud detection and prevention purposes; and companies that wish to make pre-approved offers of credit or insurance to you. To opt out of such pre-approved offers, visit www.optoutprescreen.com/.
4We will require you to provide your payment information when you sign up and we will immediately charge your card $4.95. After that, we will charge the card $19.95 for each month you continue your subscription. You may cancel at any time; however, we do not provide partial month refunds.
Equifax® is a registered trademark and Equifax Complete™ Premier is a trademark of Equifax, Inc. © 2014, Equifax Inc., Atlanta, Georgia. All rights reserved.
With the advent of the so-called “sharing economy,” a world of fun and profit has opened up to consumers. You might be driving for Uber or Lyft, renting out your home on Airbnb, or doing odd jobs on TaskRabbit, all in hopes of making a little cash. While a side job can be a great way to earn extra money, there are also tax implications to consider.
Consumers experimenting with these opportunities may sometimes overlook the fact that they are actually running a business. People who dabble in the sharing economy may never earn more than a couple hundred dollars, but once income exceeds $600 (before expenses) or $400 (after expenses), federal and state taxes, in addition to local licensing laws, take effect.
Running a business out of your home might require special permits or a business license. Check with your city clerk or other local official in charge of such things to verify what you might need.
Here are two resources that may help address questions about licensing:
Specialized Registration Rules
There may be specialized registration rules for your business. For instance, regularly renting out all or part of your home may require you to register it as a hotel—and to pay the local taxes that hotels or bed and breakfasts do. However, if you rent your home only once or twice a year while you’re on vacation, you might be exempt.
All of the licensing costs, related insurance, advertising, and hard costs invested to generate income are deductible. But as for the use of vehicles and homes, depreciation, and home office space, all the rules apply that relate to any business.
That means you must keep detailed records, logs of personal and business mileage, and receipts of all expenses. IRS Publication 334 is a must-read—all the way through—before you start your side job.
When it comes to renting your home or property to vacationers, there are different ways of reporting the income, depending on whether you treat the rentals as a business or a hobby. When you are renting the property out to several short-term visitors (with an average stay of seven days or less), you might be considered a hotel for income tax purposes. This means that the rental must be reported on Schedule C and all profits will be subject to self-employment taxes.
However, there’s good news for people who only rent out their property for a total of 14 days or less per year: all of that rental income is generally tax-free. Incidentally, if you rent your property to a tenant for 14 days or fewer, not only is the income tax-free but any repairs and remodeling the tenant does during that time is as well.
Taking on a side job to make some extra cash can be a financial boon, but it’s not without tax implications. It’s important to consult a tax professional before diving into the sharing economy. A professional will be able to advise you on your individual situation and help you avoid any costly mistakes with your taxes.
Eva Rosenberg, EA, is the publisher of TaxMama.com®, where your tax questions are answered. She teaches tax professionals how to represent you when you have tax problems. She is the author of several books and e-books, including Small Business Taxes Made Easy. Follow her on Twitter: @TaxMama
The information contained in this blog post is designed to generally educate and inform visitors to the Equifax Finance Blog. The blog posts do not give, and should not be assumed to provide, personalized tax, investment, real estate, legal, retirement, credit, personal financial, or other professional advice. Before making any financial decision, you should always consult with the appropriate professionals who can explain your options, rights, and legal responsibilities, and advise you on any tax, legal, credit, or business implications that may result from those decisions. The views and opinions expressed by the authors of blog posts are their own views and may not be the views or opinions of Equifax, Inc. and/or its affiliates.
Equifax maintains this interactive forum for education and information purposes in order to allow individuals to share their relevant knowledge and opinions with other members and visitors. We encourage you to participate in discussions about personal finance issues and other topics of interest to this community, but please read our commenting guidelines first. Equifax reserves the right to monitor postings to the forum and comments will be published at our discretion. Do you have questions or comments about your Equifax credit report or customer-service issues regarding an Equifax product? If so, please contact Equifax directly. All opinions and information expressed or shared in blog comments are solely those of the person submitting the comments, and don't necessarily represent the views of Equifax or its management.