Tax Memo – Gig Workers | Help Managing Your Taxes

Collect and keep your records and receipts during the year. Recordkeeping can help you track your income, deduct expenses and complete your tax return.

Expenses — Save receipts of your expenses. You can lower the amount of tax you owe by deducting certain expenses. (See Get Ready to File below.)

Income — Keep records of money you receive from gig work and sales. You must report all income on your tax return, even if you don’t receive Forms 1099 from the businesses that pay you.

For more guidance:

• Publication 463, Travel, Gift and Car Expenses 
• Publication 535, Business Expenses
• Publication 583, Starting a Business and Keeping Records
• Publication 527, Residential Rental Property (Including Rental of Vacation Homes)

If you earn money for gig work as an independent contractor, you may have to pay quarterly estimated taxes. You can avoid a penalty by paying enough tax on time.

Do you work as an employee and do gig work on the side? You may avoid making estimated tax payments on your gig income by withholding more tax from your employee paycheck. Use the Tax Withholding Estimator. Then fill out a new Form W-4, Employee’s Withholding Certificate and give it to your employer.

When to pay — Estimated tax payments are due four times a year:

• April 15 for payment period January 1–March 31
• June 15 for payment period April 1–May 31
• September 15 for payment period June 1–August 31
• January 15 for payment period September 1–December 31

Note: If these due dates fall on a Saturday, Sunday or legal holiday, the payments are due the next business day.

How to pay — Pay online or by mail or phone (refer to Form 1040-ES).

How to estimate — Use one of these forms to figure your estimated taxes:

• Form 1040-ES, Estimated Taxes for Individuals
• Form 1040-ES (NR), U.S. Estimated Tax for Nonresident Alien Individuals

For comprehensive information on paying estimated tax including exceptions, the underpayment penalty and methods to figure amount of payment, review Publication 505, Tax Withholding and Estimated Tax.
 

Collect income forms — The businesses you work with may send forms to the IRS to report payments made to you. If they do, you should receive copies of the forms by January 31. These may include:

• Form 1099-K, Payment Card and Third Party Network Transactions
• Form 1099-MISC, Miscellaneous Income
• Form W-2, Wage and Income Statement
• Form 1099-NEC, Nonemployee Compensation

Include all income — Use your sales receipts to report any payments not reported to you on a 1099 or W-2.

Subtract your expenses — You can lower the amount of tax you owe by deducting certain expenses. For more information, review:

• Publication 463, Travel, Entertainment, Gift, and Car Expenses
• Publication 535, Business Expenses
• Publication 587, Business Use of Your Home
• Qualified Business Income Deduction

Find information on tax filing:

• Publication 334, Tax Guide for Small Business (For Individuals Who Use Schedule C)

To file your tax return as an independent contractor (self-employed), use the records you gathered (see Keep Records above) and fill out these forms:

• Form 1040, U.S. Individual Income Tax Return or Form 1040-SR, U.S. Tax Return for Seniors
• Schedule SE (Form 1040), Self-Employment Tax
• Schedule C (Form 1040), Profit or Loss from Business (Sole Proprietorship)

Did you forget to report income from gig work? To correct a return you already filed, use Form 1040-X, Amended U.S. Individual Income Tax Return.

File your tax return — Choose a filing option:

• Call me to schedule an appointment to get your returns filed.