Dispute Resolution for Independent Contractors and Small Business

(Editor’s note: Today we hear from Stephen Kane, Founder & CEO of ArbiClaims, which helps people resolve small claims disputes online without having to go to court. Legal issues are complicated, so please be sure to consult a legal advisor about how the information below applies to you.)

If you have a dispute with someone, i.e. unpaid invoice, breach of contract or security deposit, and don’t feel you can work it out with them directly, you may want to hire an attorney. But attorneys can be pricey. So if your dispute is less than $25K or so, you may want to consider other more affordable dispute resolution options, namely: small claims court, mediation, and arbitration.

Small Claims Court

Small claims court can be an effective dispute resolution tool if the amount of money in question is relatively small (i.e. someone owes you $2,500). Every state has a different limit for small claims court, AKA the highest dollar dispute you can argue in small claims court. But it’s typically less than $15,000, or lower. The filing fees are usually around $50 depending on the amount in dispute, and you can argue your case yourself without hiring an attorney. In fact, in some states, you aren’t allowed to have an attorney argue your case in small claims court. In those states, you can hire an attorney to get advice before going into small claims court, but that attorney can’t represent you in front of the court.


Some small claims courts offer free mediation services provided by volunteers. Whether in small claims court or not, mediation is a process in which an independent third party helps two disputing parties discuss their issue in an attempt to negotiate an agreeable settlement. Mediation is not binding, so either party can typically walk away at any time and there is no requirement that the parties settle. It’s more of an opportunity to air differences and find out if everything can be worked out for both sides.


Arbitration is an agreement between two parties to allow a third party,the arbitrator, to evaluate and make a decision regarding a dispute between the two parties, much like a judge & jury in court. There is federal and state regulation which sets the ground rules for arbitration. Arbitration can be binding, in which case the arbitrator’s decision is final and court-enforceable. Or it can be non-binding, in which case the arbitrator’s decision is more of a trusted, objective resolution recommendation, but not final or enforceable. ArbiClaims, for example, uses binding arbitration to help parties resolve small claims disputes online for $79-159 per party.

The difference between mediation and arbitration can be somewhat confusing, especially when we’re talking about non-binding arbitration. Mediation is more like a negotiation between two parties, whereas arbitration lets a third party, the arbitrator, review evidence, interview witnesses, consider facts, and make a decision regarding a dispute, i.e. who owes whom money and how much.

Mediation & Arbitration Clauses

Don’t want to be taken to small claims court? Want to ensure you can use mediation and/or arbitration in case of dispute with another party?

You can do that by putting mediation and/or arbitration clauses into written agreements which say both sides must use mediation and/or arbitration in case of dispute. You can even add an addendum to an existing agreement with a mediation and/or arbitration clause. Even if you don’t have a mediation or arbitration clause, you can still both agree to use mediation or arbitration. But including a clause is insurance against having to go to court.

For larger disputes, you can add a American Arbitration Association (AAA) or JAMS mediation/arbitration clause (both are alternative dispute resolution service providers; AAA instructions for adding a clause, JAMS instructions for adding a clause). For smaller disputes, you can add an ArbiClaims arbitration clause.

Collecting Judgments

So you won your small claims case, negotiated a settlement, or got an arbitration award. Now what? How do you collect?

It can be difficult to collect a judgment from a defendant, even with a judge and jury certified court judgment. The same goes for small claims court, arbitration, and negotiated settlement. In the case of small claims court you get an official court judgment that you can take to local law enforcement to garnish wages and/or levy bank accounts to recover your judgment if the defendant doesn’t pay you on time. In the case of binding arbitration, you can have local law enforcement help you collect once you confirm your arbitration award, a generally straightforward process which involves filing a petition with the appropriate court (depends on your arbitration). Arbitration awards are confirmed in the overwhelming majority of cases unless something goes seriously awry, i.e. ethical complications. In the case of mediation, you typically get a written agreement which parties often adhere to because they took part in the process. But if parties don’t keep their end of the bargain up after out of court mediation, you can go to court to enforce that agreement like you would enforce a contract.

I hope you don’t ever have to use any of these tools or go through litigation. But if you’re in business long enough chances are you will have disputes. When you do, I hope you’re able to resolve them in the best most cost effective way possible. Visit ArbiClaims to learn more about arbitration.

2015 Taxes – All the Updates

(Editor’s note: Today we hear from Derek Davis, CEO of Shared Economy CPA, which focuses on the tax and financial needs of individuals working in the sharing economy. Tax issues are complicated, so please be sure to consult a tax advisor about how the information below applies to you.)

Tax laws change every year and can significantly change what you end up paying, so it’s important to stay up-to-date. Below are a few key changes that may impact your 2015 taxes:

  • Protecting Americans from Tax Hikes (PATH) Act: In December of 2015, Congress passed The “Protecting Americans from Tax Hikes” (PATH) Act. This passage made a number of temporary tax provisions permanent, taking the worry out of each year if Congress would take action to extend certain relief policies. Included in the extender package is the allowance of State sales tax deductions for states with no income tax. Additionally, PATH extends the deductions allowed under Section 179 of the IRS code, which enables businesses to deduct the full purchase price of up to $500,000 of qualifying equipment and/or software purchased or financed during the tax year. To see if qualify and how much money you can save, try the Section 179 calculator.
  • Taxes Due April 18th, 2016: Tax day is April 18th this year. Since the Washington DC holiday of Emancipation Day is on Friday April 15th, Federal law says that the tax deadline gets extended when it falls on a holiday or weekend, so the tax deadline for most tax payers will be Monday April 18th, 2016.
  • Standard Mileage Deduction: You may have noticed that gas prices have been steadily decreasing. Congress has noticed this trend also, so for the first time, the IRS has announced that the 2016 standard mileage rate for the business use of your vehicle is 54 cents per mile, down from 57.5 cents in 2015. Be sure to track your mileage, gas, maintenance, and repair costs, to capture the highest possible deduction for your business.
  • Affordable Care Act Penalties: Tax penalties related to the Affordable Care Act (Obamacare) are going up. The ACA has imposed penalties for not having qualifying healthcare coverage. The penalties originally started out at $95 per adult, or 1% of income over the filing threshold. In 2015 it rose to $285 per adult, or 2% of the income over the threshold. For 2016, it will be a whopping $695 per adult, or 2.5% of income.

Contact the Shared Economy CPA if you have further 2015 accounting and tax questions.

How to Write Off Voluntary Insurance Premiums

(Editor’s note: Today we hear from Argel Sabillo, Co-Founder of Levee, the app that tracks and categorizes business expenses and miles, then files your taxes via its affordable online accountants. Tax issues are complicated, so please be sure to consult a tax advisor about how the information below applies to you.)

As a self-employed individual, it’s important to have basic medical coverage for preventative care and large hospital bills. However, due to rising medical and insurance costs, and increasing deductibles and copayments, many self-employed individuals are adding voluntary insurance for additional personal and financial protection.

What is voluntary insurance?
Voluntary insurance is an additional insurance option that helps pay for bills not covered by your medical insurance. Voluntary coverage includes paying for deductibles, copayments, and other expenses that can add up if you’re too ill to work – for example, your mortgage or rent, utility bills, car payments, and credit card debts, that still need to be paid.

Not all voluntary insurance are tax deductible. Below, we’ll explore the medical, dental, vision, disability, life and long-term care insurance premiums and determine what expenses are eligible for tax writeoffs.

Medical and Dental Insurance Premiums
The amount you pay for your medical and dental insurance policies are eligible business expenses which can be written off for tax purposes. Even if the insurance covers your spouse, your dependents, and your non-dependent child who is under age 27 at the end of the year, the premium payments are tax deductible. Get Medical & Dental Insurance

Vision Insurance Premium
In general, your vision insurance premium does not qualify as an eligible business expense. However, you can claim the premium payments if you itemize your tax returns. In some cases, vision insurance premium is tax deductible, but only if it’s part of your medical coverage.

For example, there are medical benefits plans which cover eye care services as well. Such combined policies only require you to pay one premium, which is tax deductible.

In contrast, if you signed up for stand-alone vision insurance that provides, for example 20% off on your prescription glasses and contacts, then the premium is not deductible as a self-employed expense. You may, however, claim the premium payments and other vision expenses as a qualified medical expenses on Schedule A subject to the 10% limit (or 7.5% if either you or your spouse was born before January 2, 1950). Get Vision Insurance

Short Term Disability and Life Insurance Premium
The general rule is that any insurance premium paid that pays out benefits to supplement your income is non-deductible. However, the benefits you receive from the insurance company may not be taxable.

For example, if you received short-term disability benefits for lost wages or proceeds from life insurance contract from an insurance company, the amount received may not be taxed. If the IRS is not taxing you on your income benefits, then you don’t get to write off your short term disability insurance or life insurance premium. Get Life & Disability Insurance

Long Term Care Insurance Premiums
Long term care insurance (“LTC”) policies are tax-deductible, but are limited based on the age of the person insured. Below is provided by the IRS which illustrates the maximum premiums you can deduct every year per person:

  • Age 40 or under – $370
  • Age 41 to 50 – $700
  • Age 51 to 60 – $1,400
  • Age 61 to 70 – $3,720
  • Age 71 or over – $4,660

For example, if you’re 27 and you purchased a LTC policy, you can deduct up to $370. So if you only paid $300 in premium for the year, then you can only deduct $300. However, if you paid $500 for the year, you can deduct $370 and itemize the rest.

Guidelines for claiming write-offs
You must be self-employed and have had a net profit for the year in a particular trade or business. The insurance policy must be in your name or in your business’ name. If you have multiple trades or businesses, you must pick which trade to establish the policy under. You cannot combine multiple trades or businesses into one Schedule C.

Overwhelmed? Here are some clarifying examples
If you’re a rideshare driver and a freelance photographer, then you have two different trades or businesses. The IRS requires you to select which of the two trades you will establish your insurance policy under. You can only write-off your premiums if the trade or business is profitable. Therefore, if historically your photography business has been profitable, you should establish your policy under that business.

If you’re not sure which business will be profitable in the future, the IRS allows you to split the policies between your two businesses. For example, you can establish your medical insurance policy under the photography business and your dental and LTCi policies under the rideshare business.

You can only write off up to the amount of the net profit in a particular trade or business that the policy was established under. Any excess amount can be written off as a non-business medical expense, but only if you itemize your tax returns.

You cannot write off the premium paid for any month that you were eligible to participate in any employer (including your spouse’s) subsidized health plan, even if you did not actually participate.

Example Details
If your net profit from the photography business is $1,000 and you had $1,200 in medical premiums ($100 per month), then you can deduct $1,000 in self-employed health insurance deduction. The other $200 could be deducted on tax form Schedule A, if you’re itemizing.

What if you, or your spouse, got a full-time job on November 1st and had the option to sign up for medical insurance through your employer? Then you can deduct your premium from Jan 1 – October 31. The premium from Nov 1 – Dec 31 cannot be claimed as a self-employed health insurance deduction.

When to Deduct Premiums
As a self employed taxpayer, you generally deduct insurance premiums in the year you actually paid them even if you incurred them in the previous year. If you prepay your insurance premiums, you generally can’t deduct expenses in advance – you have to allocate the expenses over a period of time and only deduct expenses that apply to the current year.

Where to Claim Your Deductions
You’ll claim the deductions on tax form 1040 line 29, and not on Schedule C. Any amount that you weren’t allowed to write off for business should be claimed on Schedule A when itemizing your tax returns.

When calculating self-employment tax, you cannot subtract the self­-employed health insurance deduction when calculating your net earnings from the business which the insurance plan was established under.

The Bottom Line
If you qualify for tax deductible voluntary insurance premiums, you can claim these tax breaks to save on the rising cost of insurance premiums. In addition, having adequate insurance gives you, and your family, a peace of mind that may mean much more than the dollars you save.

10 Smart Year-End Tax Tips for the Sharing Economy

(Editor’s note: Today we hear from Argel Sabillo, Co-Founder of Levee, the app that tracks and categorizes business expenses and miles, then files your taxes via its affordable online accountants. Tax issues are complicated, so please be sure to consult a tax advisor about how the information below applies to you.)

Looking to lower your taxes this year? If you’re asking this question before the year is over, then you’re already ahead of your peers who’ll miss out on additional tax deductions this year. Here are the 10 smart moves you can take now to lower your taxes and avoid a tax audit:

Capture All Your Income Sources

You may be rideshare driving or hosting for a while but perhaps before you committed to one or two platforms, you tried other sharing economy jobs. Even if you only earned a few hundreds, your earnings are still subject to tax and you’re still legally required to report all your income. Avoid a notice from the IRS and report all your income sources.

How to check: Review your online bank statements from January to December for income received throughout the year. A fast and easy way to do this is to filter all the debits and go through each transactions. Odds are the transactions will be repetitive from the same source so do an eyeball check for one-off debit transactions.

Defer Your Income

Are you on the cusp of being taxed at a higher tax rate due to increased 2015 income? If so, maybe you should defer some of your income until next year. If you can afford it, consider stopping driving until beginning of next year. Ask yourself this question: do I want to get taxed now or a year later?

If you also have a full-time job, consider contributing to your 401(k) plan at work. The money you contributed is excluded from your income. In 2015, you can contribute up to $18,000 to employer-based plans. If you’re 50 or older, you can make an additional $6,000 in catch up contributions.

Round Up All Your Deductions

Do you have too little deductions this year compare to other sharing economy workers in the same platform? If so, go back to the drawing board, check your bank statements, receipts and odometer readings for potential deductions. If you want to know what other expenses you can deduct, ask your tax preparer or get a hold of one of our tax experts and we’d be happy to give you smart advice.

You can also download our app where you can categorize your expenses and mileage as personal or business, then we’ll help determine if your expenses are tax deductible and where it should be reported on your tax returns.

Donate to Charity

If you’re itemizing your deductions this year, you can write off your donations to qualified charitable organizations. If you’re cleaning out your closets and garage this year, make the donation before December 31 and obtain a signed receipt with the appropriate date. Take a picture of your receipt and store it in the cloud or in your tax folder. This is one of the documents that seems to magically vanish around tax time.

Also, make sure your are donating to qualified charitable organizations, otherwise, your donations are not deductible. To find out, here’s the IRS list of exempt organizations.

Pre-Pay For Professional Help

If you’re expecting professionals services next year, you can pay vendors and professional services like cleaning, repairs, and accounting in advance. Pre-payments up to one year is tax deductible in the current year which means you don’t have to wait until April 2017 to claim your deductions.

If you drive a lot or use your credit cards for both personal and business expenses, you may use financial tools or mobile apps like Levee to stay organized for tax time. The money spent on mobile app purchases related to business is tax deductible. Pre-payment for a full year subscription is tax deductible on the year paid.

For example, with Levee, you can purchase the app and prepay the tax preparation of your 2015 tax return. You can claim 100% tax deductions for filing your business returns which will be reflected on your 2015 tax return – and not 2016.

Sell Your Losing Stocks

Playing the stock market? If you sold some stocks for gains and you’re in the higher tax bracket, sell some losing stocks to offset your gains. If you need more deductions, sell your losing stocks so you can claim your deductions this year. The maximum you can deduct for the year is $3,000. Any excess losses can be carried over to the next year (make sure you track your carryovers).

What if you didn’t make enough this year? If you’re in the 15% tax bracket, you’ll pay 0% on long-term capital gains. In 2015, you’re eligible for the 0% capital gains rate if your taxable income is $37,450 or less if you’re single, or $74,900 or less if you are married filing jointly. Review your portfolio and sell the stocks you’ve been holding for more than a year with the largest unrealized gains.

Give To Your Family

Giving a gift to someone is not tax deductible unless it’s business related where the IRS will allow you to deduct $25 per recipient.

Gifts you give to family members or anyone is not taxable to the recipient but the IRS requires that you document your gifts. The reason for tracking who you give gifts to is because ultra wealthy people used to game the system to avoid paying estate taxes on their inheritance. However, an IRS exception allows for you to gift up to $14,000 to as many people as you want without filing a gift-tax return.

Alternatively, you can give your appreciated stocks to your parents. If they’re in the low tax bracket, they can qualify for the 0% tax rate on long term capital gains.

Estimate Your Tax Liability

Doing a rough calculation of what your taxes may look like by the end of the year is a helpful exercise to figure out where you stand with your taxes so that you can act to further lower your taxes before the year is over. In addition, the 4th quarter estimated tax payment is due January 15th. Therefore, if you’re a full-time sharing economy worker, make sure you pay your estimated tax payment to avoid penalty and interest.

Boost Your W-2 Withholding

Most sharing economy workers use the money as a supplemental income to their full time job. If you’re a new participant this year, chances are, your tax liability will be more this year. If you have a W-2 job, consider increasing your W-2 withholding.

The IRS imposes an underpayment penalty for insufficient payment of taxes throughout the year. So if you haven’t been paying taxes on your 1099 income, you might be subject to penalties and interest. However, taxes that you withheld from your W-2 are treated as if they were spread out evenly throughout the year, so you can avoid the penalty by boosting your withholding now versus paying estimated taxes.

Use Up Your Flexible Spending Account

A flexible spending account is a fringe benefit provided by your employer which allows you to pay for child care or medical bills with pre-tax money. The only catch is that you have to decide how much to contribute to the plan then use it all up before the end of the year, otherwise, you’ll most likely lose it.

Make that doctor’s appointment before the year is gone and/or stock up on over-the-counter meds and extra contact lenses to use up your funds.

Bottom Line

If you apply any or all of these tips, you can save a lot more money than you did last year. Plus, your tax preparer will be impressed on how savvy you are in tax planning. While some of these tips are pretty straight-forward, others may be complex and require more assistance from your tax professionals. If you have any questions about tax planning and/or require some assistance, you can contact Levee tax professionals.

Health Insurance Tax Benefits for Independent Workers

(Editor’s note: Today we hear from Derek Davis, CEO of Shared Economy CPA, which focuses on the tax and financial needs of individuals working in the sharing economy. Tax issues are complicated, so please be sure to consult a tax advisor about how the information below applies to you.)

The Affordable Care Act requires most individuals to have ‘minimum essential [health insurance] coverage’ or face a sizeable penalty – at least $695 for every person in your household. Fortunately for independent contractors, health insurance premiums, including vision and dental insurance, are 100% tax deductible.

As a self-employed person, you’re able to deduct 100% of your health insurance premiums, including dental and vision insurance. To explain: if you are an employee in a “traditional” job, you can deduct your health insurance premiums and most other medical expenses, providing you meet a series of income floors and assuming you actually itemize your taxes (file a Schedule A instead of taking a standard deduction). But as a self-employed individual, you can bypass all of the minimums and deduct 100% of your premiums on your tax return, whether you itemize or not! (You can deduct the Health insurance premiums that you pay on behalf of yourself, the sole proprietor, on page 1 of IRS Form 1040.)

This insurance can cover you, your spouse, your dependents or any of your children who are under age 27 at the end of 2015, even if they are not listed as dependents on your tax return. The policy can be in the name of either your business or yourself. This means that the premiums you pay directly reduce your adjusted gross income and reduce your ordinary taxes.

In addition, insurance premiums can also include qualified long-term care insurance premiums, and Medicare premiums. It should be noted, that this “above-the-line deduction,” or in other words, direct deductions from your adjusted gross income shown on page 1 of Form 1040, is limited to the net profit from Schedule C minus the deductions for self-employment tax. What does this mean? If your business has an overall net loss, the health insurance premiums are not deducted on page 1 of your tax return. In other words, you get to deduct your health insurance premiums on page 1 of your tax return to the extent of your profits. If your net profit is less than your premiums paid, or if you have a loss in your business, the premiums can still be deductible, but not on page 1. The premiums will be reported on Schedule A (itemized deductions) subject to deduction thresholds. But, when your business turns a profit, the ability to deduct the health insurance premiums that you paid really reduces that tax bottom line!

Get Health Coverage

Overall, the peace of mind that comes from having health care coverage, the potential tax benefits of coverage, and avoiding expensive penalties, make a strong case for investing in good health insurance. If you have any other questions about health insurance and taxes in the sharing economy, you can contact the Shared Economy CPA.

Peers Partners with Stride to Power Health Insurance Enrollment

Over the past few months, we’ve been working on an idea called “Portable Benefits,” which aims to protect independent workers when you’re sick, injured, or it’s time to retire. Good health insurance is a critical part of the safety net, but finding the best plan can be overwhelming. That’s why we’re excited to partner with Stride Health to power health insurance recommendations and enrollments for Peers members, typically saving you $418 per year on health care.

The Affordable Care Act (aka The ACA or “Obamacare”) requires that everyone in the US enroll in a health insurance plan, or pay a hefty fine. So this partnership’s not a moment too soon, as:

This Tuesday, December 15, is the last day to enroll or change plans for coverage starting January 1, 2016

Fortunately, Stride can find you and your family the most cost-effective plan, and get you covered in 10 minutes or less. They take into account 38 factors, including your prescriptions, favorite doctors, and whether you qualify for a subsidy. After enrolling in a plan, they find you prescription discounts and help you take advantage of your plan’s free benefits, like immunizations and screenings. As such, their on-call experts are available to help resolve any issues.

Get Health Coverage

Qualify for Subsidies

Depending on your income, the government may help you pay for your health plan. In fact, 8 in 10 people shopping for on-exchange plans can find options for $100 a month or less. Your subsidy amount is determined by a few factors, like your zip code, household size, and annual income.

Time to Switch

The average premium increased 7-10% from 2015 to 2016; which, for a family of 4 could amount to an extra $1,000 per year for the exact same plan. In some states, premiums are increasing 32-38%! Even if you were happy with your health care in 2015, you should consider switching plans to avoid these premium increases.

You can enroll in a new plan or switch from an existing one until January 31, 2016, but you would be uninsured and at risk until then. After January 31, you can only enroll in a 2016 health plan if you have a “qualifying event,” like getting married or having a baby.

Avoid Stiff Penalties

If you don’t buy health insurance, you’ll pay a fine of whichever is higher: 2.5% of household income, or $695 per adult and $347.50 per child. But paying the fine doesn’t mean you’ll have health coverage – you’ll still be responsible for 100% of the costs of your medical care.

Deduct Insurance Premiums

As an independent contractor, 100% of your health insurance premiums, including vision and dental insurance, may be tax deductible. This insurance can cover you, your spouse, your dependents or any of your children who are under age 27 at the end of 2015, even if they are not listed as dependents on your tax return. The insurance policy can be in the name of either your business or yourself. This means that the premiums you pay directly reduce your adjusted gross income and reduce your ordinary taxes. (Details in an upcoming post)

Strengthen Your Safety Net

Ultimately, you want health insurance. It gives you access to routine care, keeps you from going bankrupt in the event of a catastrophic injury, and, investments in preventative care will enhance your quality of life. The Affordable Care Act has improved the quality of insurance accessibility and coverage, but it’s still extremely difficult to navigate. Stride is the easiest way we’ve found to get the coverage you need at the best price. We’re excited to be working with them and you will be too.

Get Health Coverage

An open letter to policy makers: Creating a new safety net for the modern workforce


The call to support workers in the on-demand economy is growing louder. Today, a diverse group of organizations including on-demand platforms, think tanks across the political spectrum, labor leaders and worker advocacy groups, thought leaders, and Peers, issued an open letter to policy makers outlining a set of principles necessary for workers to enjoy both flexibility and stability in this new economy. Most importantly, the letter calls for the creation of a safety net for independent workers to support them when they’re injured, sick, in need of professional growth, or when it’s time to retire. At Peers, we’re working to put these principles into action by launching a “Portable Benefits” platform (more on this below).

Read the open letter to policy makers: Principles for Delivering A Stable and Flexible Safety Net For all Types of Work

The letter offers the following three principles as the foundation for a new safety net for the modern workforce. These principles are published in an open letter to policy makers, encouraging dialogue and action to support the outcomes of these principles.

1. Supporting both stability and flexibility is good for workers, business and society.

2. We need a portable vehicle for worker protections and benefits. This model should be:

– Independent: Any worker should be able to access a certain basic set of protections as an individual regardless of where they source income opportunities.

– Flexible and Pro-rated: People are pulling together income from a variety of sources, so any vehicle should support contributions that can be pro-rated by units of money earned, jobs done, or time worked, covering new ways of micro-working across different employers or platforms.

– Portable: A person should be able to take benefits and protections with them in and out of various work scenarios.

– Universal: All workers should have access to a basic set of benefits regardless of employment status.

– Supportive of Innovation: Businesses should be empowered to explore and pilot safety net options regardless of the worker classification they utilize. The time to move the conversation forward is now.

3. The time to move the conversation forward is now.

Please let us know what you think about these principles by adding to the conversation in the letter’s comments section. Moreover, you’ll be able to experience the application of these principles with the upcoming launch of the Peers Portable Benefits platform.

The Peers platform will be:

– All-in-one: Give workers access to a complete set of benefits, including health, disability, and retirement products, regardless of employment classification.

– Personalized: Include difficult-to-find benefits tailored to independent workers.

– Affordable: Allow on-demand companies to make pro-rata contributions to the cost of worker’s benefits.

There’s much work to be done, but we’re pleased to see a growing conversation, and are committed to working hard to create solutions that support workers in the new economy.

Get notified when we launch the Peers Portable Benefits platform.

Tax Tips: “I used my vehicle”

You don’t have to have been an Uber or Lyft driver for there to be special considerations to your taxes relating to use of your personal vehicle: Instacart shoppers or delivery drivers that use their own vehicle should also be aware of the additional deductions available to them.  Shared Economy CPA has provided the following most common mistakes made by people who use their personal vehicle to earn in the sharing economy:

1. Taking the Standard Mileage and Gas Deduction. Should you take the standard mileage deduction, or should you deduct actual expenses?  Once you pick a method you can’t change, so choose wisely or seek professional tax advice.

2. Not deducting your cell phone bill or Spotify premium bill.  If using your cell phone or having a Spotify premium account were “ordinary and necessary” costs to your business, they are deductible.  Make sure you calculate the percentage of the cost used for business, and document why having a cell phone and Spotify premium are ordinary and necessary business expenses.

3. Not taking the commission deduction.  Some “rideshare” drivers at one point paid up to 25% of their earnings towards commission!  For example, New Year’s Eve surge rate in Orlando, Florida was 8.9X, that means you can potentially leave 8.9X of commission deduction on the table.  Make sure you deduct all commission charged by the platform you used.

4. Keeping poor and inadequate records of your business expenses.  Make sure you check your bank records for expenses incurred that were ordinary and necessary to running your business, but forget the Hello Kitty bobble-head (you might think it was necessary, but the IRS won’t.)

We have provided these tips to you for informational purposes only.  Everyone’s tax situation is different, so please contact a tax professional if you have questions specific to your personal situation.  If you are planning on hiring a tax professional, take a look at the Tax & Finance services available through the Support Marketplace.  Thanks again to the Shared Economy CPA for sharing their expertise with the community.

Have a specific question that wasn’t addressed here?  Add your question in the forum and we’ll do our best to track down an answer for you.



Tax Tips: “I rented my home”

If you rented your home on Airbnb, VRBO, HomeAway, FlipKey, Homestay or another “homesharing” website, there are rules that apply specifically to rental income that you need to be aware of.  Shared Economy CPA has shared with us the 6 ways hosts are overpaying their taxes – don’t be one of them!


1. Not documenting all business expenses.  Did you buy new linens for your guests?  Purchase Homesharing Liability Insurance to make sure you have the legal protection you need?  Buy some local art to decorate your guestroom and welcome your guest to the area?  If you rented a home that you don’t live in, did you drive to the location to properly manage it?  All “ordinary and necessary” expenses to operate your business are tax deductible, so make sure you look back through your bank statements and credit card bills to make sure you’re not paying tax on expenses you incurred to run your business.

2 – Not deducting the 6-12% guest service fees and the 3% host service fees.  Your 1099 usually reports the gross not net income you earned, which means the total includes the commission or service fees charged to you by the company (Airbnb, VRBO etc.) that you used. Make sure you deduct the fees as these were “ordinary and necessary” expenses to run your business.  (This is the most common mistake homesharers make.)

3 – Schedule E vs. Schedule C.  Depending on how involved you are in managing your rental, it might make more sense for you to use Schedule E rather than Schedule C to report your income from renting your home.  This largely depends on how much time you spend on the business, and if you are involved in the day to day operations.  If you are using an accountant, make sure they consider which schedule will work best considering the type of renting activity you’ve been earning from.

4 – Not knowing all of the rule exceptions.  Ever heard of the Real Estate Professional exception?  What about the Mom and Pop Exception?  If you’re using an accountant, make sure they have.  If you materially participate and spent more than 750 hours running your rental, then the Real Estate Professional exception may apply to you.  If you are not closely involved in managing your rental and you earned less than $100k, the Mom and Pop exception may apply and you could deduct passive losses.  Not knowing these exceptions could result in overpaying on your tax bill, so make sure you’re using a professional who is familiar with them.

5 – Incorrectly classifying expenses.  Your tax return preparation fees are a business expense if you are including income through your sole proprietorship, so they should be deducted under Schedule C, not Schedule A.  Make sure that you’re not only documenting all of your expenses, but classifying them correctly.

We have provided these tips to you for informational purposes only.  Everyone’s tax situation is different, so please contact a tax professional if you have questions specific to your personal situation.  If you are planning on hiring a tax professional, take a look at the Tax & Finance services available through the Support Marketplace.  Thanks again to the Shared Economy CPA for sharing their expertise with the community.

Have a specific question that wasn’t addressed here?  Add your question in the forum and we’ll do our best to track down an answer for you.


Taxes in the “sharing economy”: what’s different?

You’re not the first person this has happened to: you posted your spare bedroom on Airbnb to make a little extra income, you indulged your passion for food by cooking on Feastly, or you earned some extra cash on your commute by picking up rides on Lyft, and you found yourself with a 1099 at the end of January reporting your “Miscellaneous Income.”  While you might have thought you were making a little extra money on the side, in the eyes of the IRS you were operating as sole proprietor of a business, and the income from your “sharing economy businesses” will impact your tax return this year.

As this is your first time filing 1099 income, Shared Economy CPA, who specialize in the sharing economy, have provided the tips below to help you navigate reporting your new business income:

1: Schedule C

Schedule C is the “schedule used to report income or loss from a business you operated or a profession you practiced as a sole proprietor.” (IRS)  If you’ve never earned income outside a traditional employment situation, this will likely be the first time you use Schedule C on your tax return.  Schedule C is attached to your Form 1040.

2: Get your 1099s together.

Each company you earned money through (e.g. Airbnb, Uber, TaskRabbit) will send you a 1099 to report your income (and they’ll also send a copy to the IRS.)  You’ll need to report all the income on your 1099s on Schedule C, so you’ll need to have a 1099 from each company you earned through before you’re ready to your finish Schedule C.  You should receive your 1099s by January 31, so if you haven’t received them yet, you should soon.  You’ll want to make sure your 1099s reconcile with the income deposited into your bank accounts by each company, and that the income on Form 1099 matches with the 1099 income on Schedule C Part 1.

3: Deduct your Fees and Commissions

One of the most common mistakes sharing economy earners make on their taxes is not deducting the fees and commissions charged by the sharing economy companies from their income.  All sites include a charge to you for using their website to “run your business”, usually called a commission or a service fee.  Your 1099 will usually include this fee in the total income, rather than deducting it from the total.  This fee is an “ordinary and necessary” expense to running your business, so make sure you claim this cost to you as a deduction.

4: Document your expenses.

You have to spend money to make money!  You likely had to purchase new linens for your home rental, have your car washed for Lyft, have a cellphone plan with data for Instacart or buy ingredients for your Feastly menu.  Any costs that are both “ordinary and necessary” for the activity you were earning from, are tax deductible.  Make sure you have documentation for your expenses, and list them for your records.  If you purchased something that you used for both personal and business activities, calculate the percentage it was used for personal activities, and the percentage it was used for business activities, and document your calculation clearly.  Be as detailed as possible, for your reference in the future or for your accountant if you choose to use one.  Report all of your business expenses on Schedule C Part II.

5: File your tax return by April 15

Once you’ve finished Schedule C, you can finish up the remainder of your Form 1040 (your Individual Income Tax Return) with W-2 income, if you have any, and personal expenses.

If you did not make quarterly tax payments or adjust your W-2 withholding status to account for your additional income, you might be surprised with a tax bill that is higher than you expected.  To avoid this in the future, make estimated payments throughout the year to reduce the shock of an annual tax bill and make next April a little more pleasant.

If you don’t think you’ll be able to gather all of your documents and file your tax returns by April 15, request an automatic tax extension to give yourself an extra six months to file.  However, this doesn’t mean you have an extra six months to pay your taxes, so you will need to reasonably estimate your tax owed using the information you have available and make your payment by April 15th.  If you don’t have enough funds to cover your tax owed, you will need to pay interest on your unpaid taxes, so pay what you can to limit your interest cost.

Tax Tips: “I used my vehicle”

If you rented your home or used your personal vehicle for your business activity (e.g. Airbnb, VRBO, Uber, Lyft, Instacart), make sure you read Shared Economy CPA’s tax tips as there are deductions and rules that relate specifically for those activities.

Click here if you rented your home (e.g. Airbnb, VRBO, HomeAway, FlipKey, Homestay.)

Click here if you used your personal vehicle (e.g. Lyft, Uber, Sidecar, RelayRides, Getaround, Instacart.)

We have provided these tips to you for informational purposes only.  Everyone’s tax situation is different, so please contact a tax professional if you have questions specific to your personal situation.  If you are planning on hiring an accountant to help you, make sure you choose someone familiar with the sharing economy to make sure you are making the most of your allowable deductions.  You can find some options in our Support Marketplace.

Have specific questions not answered here?  Ask us in the forum, and we’ll do our best to get you an answer.