How to Handle Taxes for Your Gig Work

People choose gig work for flexibility, autonomy, and the ability to set their own hours and pick projects, often to supplement income or as a primary source of earnings. Common types of jobs include:

• Rideshare or food delivery driving
• Renting out property or a room
• Running errands or completing tasks
• Selling goods online
• Renting equipment
• Providing creative or professional services
• Offering temporary or freelance work

When you earn through a side hustle or gig job, you're classified as self-employed. No employer is there to handle your taxes, so it's up to you to manage everything from the start. It means filling out different IRS tax forms and schedules than you're accustomed to, as well as making estimated tax payments throughout the year.

It may seem like a lot to handle, but knowing your responsibilities can save you from complications and financial penalties down the line.

Use the right tax forms

Forget quick forms like 1040EZ. Every gig worker will need to use standard Form 1040 and add Schedule C to report business income and expenses. You'll also have to pay estimated taxes four times a year if you expect to owe at least $1,000. Missing a quarterly payment could lead to penalties and extra fees from the IRS. It's smart to mark the tax deadlines of the following year on your calendar: April 15, June 17, September 16, and January 15.

Track all your income

To make tax time easier, organize your records throughout the year. Here are some key strategies to follow:

• Track Income: Keep a detailed record of all your earnings.
• Save Receipts: Hold onto receipts for any work-related purchases, including mileage logs, equipment, and any supplies.
• Common deductible expenses include: Advertising, car costs, travel, and even a portion of your phone bill or home office.

Remember, the IRS requires solid documentation for these deductions, so make sure to keep your records until well after tax season ends.

Understand all your obligations

Detailed record-keeping becomes especially important if you're juggling multiple gigs. Every dollar you earn from gig work—whether it's tips, cash jobs, or side hustle payments—is considered taxable income. Some companies may send you 1099 forms to report your earnings, but if they don't, it's still your responsibility to report everything.

Depending on the amounts of your gig earnings and how payments are delivered to you, you might need to fill out several IRS forms, such as the 1099-NEC for nonemployee compensation and the 1099-K for payments processed through third-party apps. Occasionally, you may also see a 1099-MISC for more unique types of income.

If your platform doesn't provide a form, make sure to keep a personal log of what you earn. This not only ensures you're compliant but also helps you stay organized when it's time to file.

Set aside tax money

Preparation for filing your taxes as a gig worker is a year-round effort. Setting aside funds for taxes right after you get paid is a smart way to avoid any surprises during filing season. Experts recommend saving around 25-30% of your self-employed income. You can use budgeting apps to help with this or simply open a separate savings account to keep your tax money safe and out of your everyday spending.

Multiple income sources

If gigs are just part of your earnings and you also work a regular job, tax filing can get complicated quickly. You'll need to consider state or local taxes, which may vary based on your location and income. To make sure you report your full tax picture, add up all sources of income—gigs, jobs, scholarships, and any other earnings—before filing. Ignoring state or city tax requirements might lead to missed local credits or penalties.

If you'd like to make your tax situation a bit simpler, consider asking your employer to withhold extra income tax from your paycheck by filling out a new W-4 form. It's a way to take some of the weight off your shoulders when tax time rolls around, making it easier to manage your overall tax burden.

User guides and expert help

Tax rules for gig work can be a lot to handle. The IRS has specific guides for self-employed and gig workers which walk you through forms, deadlines, and deductions. Tax software programs are a big help, and if you get lost, a tax pro can walk you through everything. For detailed information visit the IRS Gig Economy Tax Center. Sometimes, spending a little on expert help saves you serious money—and stress—at tax time.