The side hustle - it seems like just about everybody has one nowadays. Some people do yard work for their neighbors, some people deliver groceries, and some people rent out their car on Turo. Of course, you should always try to remain aware of your freelancing tax implications when operating on a platform such as Turo. Even though the money you earn from Turo will initially be delivered to your bank account without any withholdings, the Internal Revenue Service will eventually want their slice of the pie.
Our Atlanta freelancer CPAs know how difficult it can be to manage these taxes yourself - especially if you are also working a full-time job. As such, we have put together this brief guide to explain how your income from Turo will be taxed.
Freelancing Tax Implications
As you may have guessed, freelancing taxes work a little differently than regular W-2 taxes. This is largely because, for taxation purposes, the IRS classifies freelancers as self-employed small business owners. Just like many things in life, this can be both good news and bad news for your tax return.
Business Expense Deductions
The good news is that since you are operating a small business, you will be able to write-off some of your operating expenses. When renting your car out on Turo, this might mean that you can deduct the cost of oil changes, tire changes, and other ongoing maintenance costs. Alternatively, you may be able to simply write-off the IRS's standard mileage deduction - 54.5 cents per mile as of 2018. Since each tax scenario is unique, it may be a good idea to speak with a trained accountant to learn more about which expenses you can and cannot deduct. Our team of skilled CPAs are standing by and ready to help.
When you are a W-2 employee, you receive a check every one to two weeks that have already had the taxes taken out of it. What you may not have noticed is that some of those withheld taxes are funded by both the employee and employer. When you are self-employed, you will, unfortunately, need to pay both sides of those taxes. This usually means that self-employed individuals will pay a higher marginal tax rate than a regular employee. Of course, it is worth noting that you will only pay taxes on your net income from Turo - after you have made your deductions. Should you need any assistance in figuring out how much tax you should be paying, our Atlanta freelancer CPAs are always available to assist.
Renting your car out on Turo can be a great way to bring in a little extra money each month. However, this additional income will ultimately have an effect on your year-end tax return. Luckily, our Atlanta freelancer CPAs know exactly how to file your return in a way that maximizes your deductions and minimizes your taxes. Get in touch with us today to see how we can help you.
This blog article is not intended to be the rendering of legal, accounting, tax advice or other professional services. Articles are based on current or proposed tax rules at the time they are written and older posts are not updated for tax rule changes. We expressly disclaim all liability in regard to actions taken or not taken based on the contents of this blog as well as the use or interpretation of this information. Information provided on this website is not all-inclusive and such information should not be relied upon as being all-inclusive.