Many people take up gig work on a part-time or full-time basis, often through a digital platform like an app or website. Gig work, such driving a car for booked rides, selling goods online, renting out property, or providing other on-demand work, is taxable and must be reported as income on the worker’s tax return.
Here are some things gig workers should know to stay on top of their tax responsibilities:
Pay your taxes as you go
If you earn a paycheck as a gig economy employee, your employer usually withholds
tax from your pay to help cover taxes you owe. If you’re a gig economy worker who’s not
considered an employee, two ways you can help cover your taxes are:
- Fill out and submit a new Form W-4 for other jobs where you work as an employee.
- Make quarterly estimated tax payments to help pay your taxes throughout the year, including self-employment tax.
Keep good records
The IRS requires you to keep adequate proof of income and expenses. Some gig companies
will track some of this information for you and send you a W-2, 1099-MISC or a 1099-K at
the end of the year. Even if they don’t, it’s important that you keep track of all your income
and expenses to report on your tax return.
Check your tax payments
A Paycheck Checkup using the IRS Withholding Estimator can help you see if you should
make additional tax payments to avoid an unexpected tax bill or underpayment penalty
when you file your tax return. This is especially important if you:
- Have multiple jobs – especially if you don’t have each employer withhold taxes.
- Expect to pay self-employment tax.