Taxes for Gig Workers and Freelancers: IRS Guide

This section is for people who earn money outside a regular paycheck: rideshare and delivery drivers, people who sell on online marketplaces, freelance writers, designers and developers, tutors, handymen, pet sitters, and anyone with a side gig. You might be paid through an app, by card, or in cash. In the IRS's eyes, you are usually self-employed. That means no one withholds tax for you, and you report the income and your business expenses on Schedule C with your Form 1040.

That sounds like a lot, but the rules are manageable once you know the three things that cause most problems: income that goes unreported, self-employment tax, and missed quarterly payments.

What the IRS knows about your gig income

Platforms and clients report some payments to the IRS, and the IRS compares those reports with your return.

Form 1099-K (payment apps, marketplaces and card processors). Payment apps and online marketplaces must send a Form 1099-K only if the payments you received for goods or services through that platform total more than $20,000 in more than 200 transactions. The 2025 tax law the IRS calls the One, Big, Beautiful Bill restored this older threshold retroactively (IRS, IR-2025-107). Platforms may still send a 1099-K for smaller amounts. Card processors are different. If customers pay you directly by credit, debit or gift card, you get a 1099-K no matter how many payments or how much (IRS, "Understanding your Form 1099-K").

Form 1099-NEC (clients who pay you for services). For payments made in 2026, a business generally has to send you a 1099-NEC only if it paid you at least $2,000 during the year. For 2025 and earlier, the threshold was $600. The IRS says the $2,000 amount may be adjusted for inflation starting in 2027 (Instructions for Forms 1099-MISC and 1099-NEC, Rev. December 2026).

When forms arrive. These forms are due to you by Jan. 31. In 2027 that date falls on a Sunday, so expect your 2026 forms by Monday, Feb. 1, 2027.

Self-employment tax: the part that surprises people

If your net earnings from self-employment are $400 or more, you owe self-employment (SE) tax. This is the self-employed person's version of the Social Security and Medicare taxes taken from an employee's paycheck. You figure it on Schedule SE.

• The rate is 15.3%: 12.4% for Social Security and 2.9% for Medicare. It applies to 92.35% of your net profit.
• The Social Security part has a cap. For 2026, it applies to the first $184,500 of combined wages and self-employment earnings. For 2025, the cap was $176,100 (IRS Topic 751; Schedule SE 2025).
• High earners pay more Medicare tax. An additional 0.9% Medicare tax applies to earnings above $200,000 for single filers and $250,000 for married couples filing jointly.
• You can deduct half. The employer-equivalent half of your SE tax is deducted when you figure adjusted gross income.

Use the calculator to estimate your own SE tax and quarterly payments.

Quarterly estimated tax: your gig-year calendar

You generally need to make estimated tax payments if you expect to owe $1,000 or more when you file (Form 1040-ES, 2026). Estimated payments cover both income tax and SE tax.

You can skip the January payment if you file your 2026 return by Feb. 1, 2027, and pay the whole balance with it. To avoid the underpayment penalty, most people need to pay the smaller of 90% of this year's tax or 100% of last year's tax. That second figure rises to 110% if last year's adjusted gross income was over $150,000. You can pay through IRS Direct Pay, your IRS Online Account, the IRS app or EFTPS. If you also have a W-2 job, you can ask your employer to withhold more on Form W-4 instead of making quarterly payments.

The 2026 return itself is due Thursday, April 15, 2027.

Expenses and records

You pay tax on profit, not on gross receipts, so good records save real money.

• Mileage. The IRS business standard mileage rate for 2026 is 72.5 cents per mile for miles driven Jan. 1 through June 30. The IRS raised it to 76 cents for miles driven July 1 through Dec. 31, 2026, citing higher fuel prices. The 2025 rate was 70 cents (IRS standard mileage rates page; Announcement 2026-11). If you own your car and want to use the standard rate, you must choose it in the first year you use the car for business. Keep a log with dates, miles and the purpose of each trip, and total your 2026 miles separately before and after July 1.
• Platform fees and commissions. A 1099-K shows gross payments, which can include fees the platform kept and refunds you gave. Keep the platform's annual summary so you can reconcile the numbers.
• Phone, supplies and equipment. Deduct only the business part, and keep receipts.
• Separate accounts. A separate bank account or payment profile for gig money makes year-end totals, and any IRS questions, much easier.

Notices gig workers get most often

CP2000: income mismatch. This is the big one. If a 1099-K or 1099-NEC was reported to the IRS but the income isn't on your return, the IRS proposes extra tax, often including SE tax. You can agree, partly agree, or disagree with documents. Some people get a CP2501 first. If you don't respond, a CP3219A notice of deficiency follows.

CP14: balance due. This comes when your return shows tax you didn't pay. It is common in the first year of gig work, when people aren't yet making quarterly payments.

CP23, CP24 or CP25: estimated payment mismatch. The estimated payments you claimed don't match what the IRS has on record. Check your payment history in your IRS Online Account.

CP59 and CP2566: no return filed. If 1099s were reported but you didn't file, the IRS may ask for the return. It may then prepare one for you that leaves out your expenses.

Letter 566: audit by mail. The IRS asks for records to support items on your Schedule C, often mileage or other expenses.

Common problems and where to start

• You got a 1099-K that includes personal payments or wrong amounts. Report the form on your return, then back out the non-taxable amounts. Keep records that show why. If the IRS has already sent a CP2000, answer it with those records.
• You owe more than you can pay. See what to do if you can't pay and IRS payment plans.
• You were charged penalties. See IRS penalty relief, including the new automatic relief for people with a clean three-year history.
• You forgot income on a filed return. See amending a return. Fixing it yourself is usually cheaper than waiting for a CP2000.
• You haven't filed for gig years. See unfiled tax returns. Your wage and income transcript shows the 1099s the IRS received; see IRS transcripts.
• You're being audited. See IRS audits.

If your side work grows into a full-time business, read our self-employed guide next.

IRSV.com is an independent guide and is not affiliated with the IRS. This page is general information, not tax or legal advice. Rules change; confirm details on IRS.gov or with a tax professional. Found an error? Tell us.