(NAPSI)—According to data from the IRS, millennials—those between 18 and 34—file one out of every three tax returns, earn one out of every six dollars in income and pay one out of every 13 dollars in taxes.
The Problem
For many of these young people, their tax filing is complicated by such things as high education loans and other debt and by the current “gig economy” in which many people are essentially self-employed, though they may not be aware of it.
Airbnb, DogVacay, TaskRabbit and Liquid are all examples of the trend toward using the Internet to generate revenue from assets people already own—such as houses, cars and bicycles—and provided services.
“There’s a real danger here that people engaged in the ‘gig economy’ won’t understand that all income has to be reported on their tax returns, even if they are paid in cash or the activity is only part-time or occasional,” explained Kerry Freeman, an enrolled agent and owner of Freeman Income Tax Service. “Estimated quarterly payments may be necessary, and when you’re selling cuff links on Etsy, for instance, the fact that you could be setting yourself up for a letter from the IRS is probably the last thing on your mind.”
According to Freeman, taxpayers may also be missing out on business deductions they are qualified to claim, such as mileage on leased cars. The rules on rental income can be particularly tricky. In some circumstances, rental income does not need to be reported at all for federal tax purposes.
Who Can Help
To help young people—and everyone else—stay on top of all the tax aspects of the sharing economy and avoid a potential misstep, the IRS suggests speaking with a trusted tax professional such as an enrolled agent (EA). EAs are licensed by the U.S. Department of the Treasury and overseen by the IRS. In order to earn the credential, EAs must pass a stringent three-part exam on taxation. To maintain the credential, they must report annual continuing education on tax to the IRS.
Hiring an enrolled agent can save significant time and effort in tax preparation and its associated tasks. EAs are equipped to advise, represent, and prepare tax returns for individuals, partnerships, corporations, estates, trusts, and any entities with tax-reporting requirements. EAs’ continuing education requirements ensure that they have the knowledge to effectively represent taxpayers audited by the IRS despite the continually changing tax laws. Members of the National Association of Enrolled Agents (NAEA) must fulfill continuing professional education requirements that exceed the IRS’ required minimum. NAEA members also adhere to a stringent Code of Ethics and Rules of Professional Conduct.
Where to Get Help
To find an EA nearby, use the “Find a Tax Expert” directory on www.eatax.org.
On the Net:North American Precis Syndicate, Inc.(NAPSI)