Gig Market Audits are Likely to go up – But Where is My 1099?
The Internal Revenue Service (IRS) will likely increase its focus on taxpayers who work in the gig economy.
Why the change? The agency is expected to increase its scrutiny of this market based on the results of a new report released by the Treasury Inspector General of Tax Administration (TIGTA). The report claims the IRS has failed to collect taxes from the gig economy, also known as the “sharing economy,” because it was not properly tracking tax forms.
Ultimately, the TIGTA has called on the IRS to address noncompliance and better ensure those who work in this market are meeting their tax obligations.
What does this mean for taxpayers who work in the gig economy? Those who make money working for Uber, Etsy, Airbnb, and other online platforms are wise to account for taxable income. If the IRS chooses to audit your returns, a failure to claim this income could result in serious monetary penalties.
How do I file properly? Generally, those who work in the gig economy will get a Form 1099. The companies that provide these forms will send one copy to the worker and another to the IRS. These companies send out the forms beginning in January and throughout March. In some cases, the company may need to make an amendment to its’ 1099. This can result in the taxpayer not getting his or her tax paperwork until the end of March.
Once you get these forms, use the information on your 1099 to claim the required income on your tax return.