Update: On December 23, 2022, the IRS announced a one-year delay for implementing the $600 reporting threshold to qualify for a 1099-K. The IRS commissioner stated that the change is “to help smooth the transition and ensure clarity for taxpayers, tax professionals, and the industry.” To align with this update from the IRS, Turo hosts will now only receive a 1099-K for 2022 if a) they earned more than $20,000 in gross earnings and had more than 200 transactions in 2022, or b) reside in a state that has a lower qualifying threshold, including District of Columbia ($600+), Illinois ($1,000+), Maryland, ($600+), Massachusetts ($600), Missouri ($1,200+), New Jersey ($1,000+) Vermont, ($600+), and Virginia ($600+). You can read more from the IRS here.
W-9 required for Turo hosts; 1099-K thresholds lowered for 2022 tax year
Up until the end of 2021, most Turo hosts only received a 1099-K tax form if they earned more than $20,000 annually, and they had at least 200 transactions throughout the year. Certain states required reporting on lower earnings, but the federal threshold for qualifying for a 1099-K was $20,000 in earnings and more than 200 transactions.
The reporting threshold was significantly modified, however, starting in 2022. Now, anyone who receives $600 or more from selling goods or services from third-party platforms, like Turo, will receive a 1099-K tax form regardless of the total number of transactions throughout the year. This change in federal law will dramatically increase the number of hosts who will receive a 1099-K tax form from Turo.
According to a recent study published by the Department of Treasury, thousands of sharing economy workers misreport or underreport their earnings, leading to billions in missed taxes. Taxpayers are required to report total income in their tax returns regardless of receiving a 1099-K tax form or not. But Uncle Sam doesn’t think everyone has been reporting their fair share, and therefore is expanding the reporting obligation of sharing economy platforms and their communities.
The change enacted under the 2021 American Rescue Plan Act attempts to solve the underreporting problem by significantly lowering the reporting threshold to $600 annually. They hope this change will lead to more accurate tax reports from people participating in the sharing economy, especially since sharing economy entrepreneurship has grown substantially in the wake of the pandemic.
Action required: All Turo hosts must submit a W-9 by November 4, 2022
This change means that, starting with the 2022 reporting year, Turo will now be required to issue 1099-K tax forms to hosts who make more than $600 annually sharing their cars on Turo.
In order for Turo and our host community to comply with this important legislation, it is essential that all hosts complete their personal tax information (or Form W-9) in their Host Hub by November 4, 2022. Hosts who don’t submit their W-9 by November 4 will have their payments paused until they provide the required information.
To submit your tax info, navigate to your tax information page and tap or click the link in the notification.
Submit your tax info today to avoid disruption to your business on Turo!
More info to come
Turo will provide more information and resources as we get closer to the 2022 tax reporting season. In the meantime, it’s important that hosts maintain proper documentation of your expenses while running your business on Turo. Maintaining good books and records and consulting your local tax expert when completing your tax return will ensure you don’t end up overpaying taxes.
Save all those receipts and talk to your tax professional. It’s best to be ready when Uncle Sam comes knocking on your door!
If you want to learn more about the recent changes:
- Technical Explanation of Section 9674 of H.R. 1319, the “American Rescue Plan Act of 2021”, Committee on Taxation (March 2021)
- American Rescue Plan Act Lowers Form 1099-K Reporting Threshold, PWC
- Understanding Your Form 1099-K, IRS
- Expansion of the Gig Economy, Warrants Focus on Improving Self-employment Tax Compliance, Treasury
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