Self-employment tax compliance
Whether you refer to it as gig economy or shared economy, self-employment is on the rise when it comes to delivery apps such as Uber, Lyft, Uber Eats and DoorDash – and the IRS wants its fair share.
The reality is that many taxpayers have discrepancies between what is reported on their tax returns and payments reported to the IRS on Forms 1099-K. Taxpayers are under-reporting income.
Treasury regulations don’t require certain gig economy businesses to issue Form 1099-K unless workers earn at least $20,000 and engage in at least 200 transactions annually. Consequently, many taxpayers who earn income in the gig economy don’t receive a Form 1099-K; therefore, their income isn’t reported to the IRS. When income isn’t reported to the IRS, taxpayers are more likely to be non-compliant.