Gig Economy Taxes: What Workers Need to Know

The gig economy – also called the sharing or on-demand economy – includes income earned from digital platforms and apps such as ridesharing, delivery services, freelance marketplaces, home rentals, or project-based work. According to the IRS Gig Economy Tax Center (IRS Gig Economy Tax Center), anyone who earns money through these platforms is generally considered self-employed for federal tax purposes, and their income must be reported.

What Is Gig Economy Income?

Gig economy income refers to money earned from providing goods, services, or labor through digital platforms. Common examples include:

• Rideshare and delivery driving
• Freelance or contract work (graphic design, writing, consulting, programming)
• Short-term home or property rentals
• Task-based or on-demand labor
• Online sales or platform-based services

The IRS considers gig income taxable even if it is part-time, occasional, or paid in cash or digital currency. Understanding how taxable income is calculated often starts with defining Adjusted Gross Income; see Adjusted Gross Income (AGI).

Tax Responsibilities for Gig Workers

Gig workers are usually treated as self-employed independent contractors. This means they are responsible for reporting and paying:

• Income tax
• Self-employment tax (Social Security and Medicare)
• Estimated quarterly tax payments when withholding is not applied

Workers may receive Form 1099-K, 1099-NEC, or 1099-MISC. IRS explanation: Understanding Your Form 1099-K.

When a payer needs your Taxpayer Identification Number, you may be asked to complete Form W-9.

Recordkeeping Requirements

The IRS recommends maintaining detailed records of:

• Income from all platforms
• Business expenses
• Mileage and vehicle expenses
• Receipts, invoices, payment logs

Official IRS guidance: Recordkeeping Requirements.

Common Business Deductions for Gig Workers

Self-employed gig workers may deduct ordinary and necessary business expenses. IRS explanation: Business Expense Deductions.

• Vehicle expenses — Standard Mileage Rates
• Home office deduction — Home Office Deduction
• Supplies, tools, software
• Business use of phone and internet
• Platform and transaction fees

Some deductions and credits depend on Modified Adjusted Gross Income; see MAGI (Modified Adjusted Gross Income).

Paying Estimated Taxes

Because gig income typically does not include tax withholding, workers may need to make quarterly estimated tax payments. IRS guidance:
Estimated Taxes.

Estimated taxes usually cover:

• Income tax
• Self-employment tax — Self-Employment Tax

How Gig Workers File Their Taxes

Gig workers generally file using:

• Schedule C — Schedule C
• Schedule SE — Schedule SE

Additional IRS resources for self-employed individuals:
IRS Self-Employed Tax Center.

Digital Platforms and Worker Classification

Gig workers are typically independent contractors, not employees. IRS classification rules:
Independent Contractor vs. Employee.

IRS Resources for Gig Workers

The official IRS hub for gig workers is available here: IRS Gig Economy Tax Center.

M. Spik

Editor
25 years of experience managing tax, accounting, payroll, and employment-related information portals. Editor of Accounting Portal since 2011.
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