With on-demand workers falling into a grey area between employees and self-employed, filing taxes can be complex. According to an American University study, the result is that the IRS is deprived of billions in income tax receipts.
More than 2.5 million Americans earned income via on-demand platforms such as Airbnb, Etsy and Lyft in 2014, generating an estimated $15 billion in revenues. But the companies don’t withhold taxes on the income they pay people who provide services or sell items via their platforms. The companies are required to notify the IRS of that income — and send service providers a statement of yearly earnings to file with their tax returns . A study by researchers at American University found that more than two-thirds of those who earned income from the platform economy did not receive an earnings statement. The study, which surveyed 40,000 members of the National Association of the Self Employed, found that many who earn income on the platforms are confused about how to report earnings on their tax returns.