As we hurtle toward the end of tax season, there are times when I find it difficult to still form coherent thoughts. Here’s to hoping that the rest of this makes sense then, and maybe that it even contains important information for some of you. I believe that last part is possible because it is about something that we have seen more this tax season than ever before - the growth of the sharing economy.

So yes, this includes you if you have given an Uber or Lyft ride. It probably also includes you if you used any property you owned as an Airbnb. What all these things come back to is the essential rule that if you earn money, the IRS very likely wants to know about it.

This even includes income for which you did not receive a Form 1099 or Form W2. In fact, it even includes transactions where you were paid in cash. Many believe that if there is no paper trail, there is no way the IRS could know about it, and I cannot claim that this is exactly untrue. Just remember, though, that if you are not claiming such income on a tax return, but someone else is mentioning it elsewhere, say as a deduction, that is the beginning of a paper trail of which you were unaware.

Even if you rent out some space in your home for a few weeks, but lived in it the rest of the year, there could be tax implications. Granted, these aren’t the same as having real estate that are purely investment properties that you rent out, but there still rules surrounding it.

What this sharing economy seems to add up to more than anything – at least from our view here – is many more people earning income in new ways that alters their tax picture, and often in ways they do not understand. This is certainly a situation where consulting a professional may be necessary to gain the proper peace of mind that you have submitted an accurate tax return.

This belief isn’t quite as self-serving as it may seem, though, for there are benefits for those who seek that type of assistance. You see, for just as there are different rules to be aware of when you make new types of income, there are also most likely new deductions involved. You don’t want to avoid reporting income that the IRS will want to tax you on, but you also don’t want to be paying more than your fair and legal share.

Finally, when it comes to paying taxes on this money, be aware that the IRS wants to be sure that you are paying as you go during the year. So if you are leveraging this new economy to the point where you’re making enough money to need to pay a significant amount of income tax, the IRS will expect quarterly estimated tax payments to ensure you are living up to those obligations.

I know that this can feel like there is a lot involved for something that many people run as a simple sideline business. To a certain extent this is true, but it is also an area where you want to be sure that you have the correct answers. We are confident that we can give them to you, and would be happy to discuss the situation if you have any concerns surrounding it.