Your Guide to Taxes for Self-Employed and Gig Workers
A cheat sheet on the taxes, breaks and business deductions that apply to workers who get 1099s
By Ashlea Ebeling
Taking on a gig job means taking on new tax responsibilities.
You might not think you’re in business, but if you’re reselling items online, tutoring or pet sitting, for example, the money you make is generally considered self-employment income. You’ll likely have to account for it when you file your taxes. On the plus side, you also may get the benefit of writing off business expenses.
Here are key tax considerations for gig workers (also see the IRS Gig Economy Tax Center).
What gig-economy income is taxable?
You must report income earned as a gig worker on your tax return even if the income isn’t reported to you and the Internal Revenue Service on an information-return form like a 1099-MISC, a 1099-NEC or 1099-K. It is income no matter how you are paid, whether in cash, through a payment app or with virtual currency.
Estimated taxes and withholding
The tax system is pay as you go, so taxpayers with self-employment income generally must make quarterly estimated payments. For 2025 taxes, those deadlines are April 15, June 16, Sept. 15, and Jan. 15, 2026. It’s crucial to stay on top of deadlines because there are penalties for underpaying estimates.
Those who also have W-2 wage income or file jointly with a spouse who does can adjust the tax withholding with the employer to withhold more and make up for missing estimated tax payments. Filers facing penalties can save by making payments before their April 15 tax return due date.
Self-employment taxes
You must file a tax return if you have net earnings from self-employment of $400 or more from gig work. Unlike traditional employees whose employers handle withholding for Social Security and Medicare taxes, gig workers are responsible for paying their own employment taxes. You must pay both the employee and employer portion of these taxes. Although you pay the entire amount, there is a deduction for half of this self-employment tax. Lower earners often owe more for these social-insurance taxes than income taxes.
Business deductions
Gig workers are taxed on profits rather than gross revenue. This means the taxable income is what remains after deducting business-related expenses. Deductible expenses may include expenses for maintaining a home office, business phone and internet use, vehicle mileage for business travel and business meals. Meticulous records are essential in the case of an IRS audit.
Gig workers may be eligible for a 20% deduction for so-called pass-through businesses, which pay income taxes through their owners’ individual returns. That deduction was created in the 2017 tax law and was designed to provide a tax-rate cut similar to those given to corporations. The deduction, like much of the rest of that law, is scheduled to expire after this year, and Congress may make changes.
Understanding Form 1099-K
More gig workers in the coming years with income from online platforms can expect to get Form 1099-Ks. These are reporting forms that are sent in duplicate to the IRS, like W-2 forms for employees. That means the IRS will now know a lot more about gig-work income. The threshold for these forms to go out for 2024 is when transactions for goods and services exceed $5,000. That threshold is set to drop to $2,500 in 2025, and $600 in 2026. The IRS has a guide to understanding your 1099-K.
Saving for retirement
Self-employed individuals have access to retirement plans like SEP-IRAs and Solo 401(k)s, with higher contribution limits than traditional or Roth IRAs. For 2024, the contribution limit for a Solo 401(k) is $69,000 plus catch-up amounts for those 50 and older.
Contributions to SEP IRAs and Solo 401(k)s can often be made until the mid-October tax return filing deadline for those who file an extension.
Source: WSJ