Understand your tax obligation if you operate a digital platform, marketplace or business in the gig economy. You must correctly classify workers and meet requirements for information reporting and tax withholding, filing, and depositing. You may also want to consider helping your workers meet their tax obligations.
What to Do
Here’s how to manage taxes for a digital platform or business:
It is critical that business owners correctly determine whether the individual providing services is an employee or independent contractor. For most types of workers, the common law rules for worker classification apply.
Employers: Use Form W-2
For more information, review General Instructions for Form W-2 and W-3 (PDF).
Payers: Use Form 1099-MISC
For more information, review Information Return Reporting.
Payment Settlement Entities: Use Form 1099-K
Report payments with Form 1099-K, Payment Card and Third Party Network Transactions. For more information, review Online Payment Network Reporting Requirements.
Businesses must file a tax return whether or not they have a taxable income.
Depending on the structure and activity, businesses may be required to pay certain business taxes.
Use the Electronic Federal Tax Payment System (EFTPS) to pay all federal taxes and tax deposits.
Failure to file a return and pay taxes on time may result in penalties and interest.
If you own an interest in a trade or business, you may be eligible for a qualified business income (QBI) deduction. Visit the QBI deduction web page for more information.
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