Jump to Navigation
Over 30 Years of Experience handling tax controversies & tax disputes

The sharing economy and tax compliance, part 2: What type of 1099?

Let's resume our discussion of the complexities of employment taxes for people involved in the social-sharing economy.

One example of this is the controversy about whether drivers for Uber, a popular ride-sharing service, are independent contractors rather than employees. We wrote about that in the first part of this post on August 29.

In this part of the post, let's consider some of the possible scenarios for those who work for social-sharing companies.

If you work for such a company, you probably won't have taxes withheld from the payments you receive. Does that mean, however, that you can count on getting a Form 1099?

The answer is no. You might get a 1099 or you might not. Different companies have different policies about sending these out, so it depends a lot on which company you work for.

Even if you get a 1099, you need to be aware of what type of 1099 it is. Many people are familiar with Form 1099-MISC, which is for miscellaneous income made by independent contractors.

But it is possible that instead of a Form 1099-MISC you could receive a Form 1099-K or some other type of 1099.

What is Form 1099-K? It's a fairly new form, used by credit-card companies, banks and third-party payment services such as Paypal to provide information about transactions they have processed.

Since 2012, federal law has required these entities to send this informational form to business owners and the IRS. It was intended as a mechanism to prevent the potential underreporting of business income.

More recently, however, some social-sharing companies have extended Form 1099-K to their service providers. The premise is that the sharing company is merely an intermediary that has processed an exchange between independent individuals.

There are other types of 1099s as well, often replete with multiple schedules. Social sharing isn't only a brave new world for service delivery; it is also a challenging new world for tax compliance.

No Comments

Leave a comment
Comment Information
Have a Question? Ask an Attorney:

Bold labels are required.

Contact Information
disclaimer.

The use of the Internet or this form for communication with the firm or any individual member of the firm does not establish an attorney-client relationship. Confidential or time-sensitive information should not be sent through this form.

close
Visit Our
Tax Law Website
Contact Information

Levins Tax Law, LLC
1671 Worcester Road, Suite 304
Framingham, MA 01701

Framingham Law Office Map

Levins Tax Law, LLC
38 Newbury Street, 6th Floor
Boston, MA 02116

Boston Law Office Map
By Appointment Only

Phone: 508-435-0118
Toll-Free: 888-333-9501
Fax: 888-333-0291