Quick overview

Gig workers generally operate as self-employed individuals. That affects how you report income, how you pay Social Security and Medicare taxes (via self-employment tax), and whether you need to make quarterly estimated payments. The core federal forms you’ll use are Form 1040, Schedule C, and Schedule SE, but you may also deal with several information returns such as Form 1099‑NEC and Form 1099‑K. (See the IRS Gig Economy Tax Center for official guidance: https://www.irs.gov/businesses/small-businesses-self-employed/gig-economy-tax-center.)

Which federal forms matter — and why

  • Form 1040: Your individual income tax return. All taxable income flows to this form.
  • Schedule C (Form 1040): Reports profit or loss from your gig business as a sole proprietor. You list gross receipts, business expenses, and compute net profit or loss. (IRS guidance: https://www.irs.gov/forms-pubs/about-schedule-c-form-1040.)
  • Schedule SE (Form 1040): Calculates self-employment (SE) tax — the Social Security and Medicare taxes you must pay on net self-employment income. You’ll also use the result to compute the deductible half of SE tax on Form 1040. (IRS guidance: https://www.irs.gov/forms-pubs/about-schedule-se-form-1040.)
  • Form 1099‑NEC: Issued by clients who paid you $600 or more for nonemployee compensation. It’s an information return; you must report the income even if you don’t receive a 1099. See our guide to 1099 variants for details. (internal link: Essential forms for freelancers)
  • Form 1099‑K: Issued by payment processors or third‑party settlement organizations for payments processed through their networks. Rules and platforms’ reporting practices have changed recently, so review any 1099‑K you receive and reconcile it to your records. (internal link: Filing taxes after receiving a 1099-K)

Note: Not receiving a 1099 doesn’t mean the income is tax-free. The requirement to report all income applies regardless of information returns.

Common thresholds and filing triggers

  • Self-employment tax filing: If your net earnings from self-employment are $400 or more in the year, you must file and complete Schedule SE. (IRS source: About Schedule SE.)
  • Information returns: Payers typically issue Form 1099‑NEC when they pay nonemployee compensation of $600 or more. Payment processors may issue Form 1099‑K under their reporting rules — check platform statements.

The safest practice is to track all receipts and treat every dollar of income as reportable income until you can prove otherwise.

Step-by-step filing checklist for gig workers

  1. Collect your records: bank deposits, platform dashboards, invoices, and receipts for expenses. Don’t rely solely on 1099s — they can be incomplete.
  2. Reconcile payments: Match platform income reports (e.g., rideshare or marketplace statements) to bank deposits. Note fees and refunds separately; some platforms report gross receipts while others report net of fees.
  3. Separate business vs personal expenses: Keep clear records so you can substantiate deductions. Use a dedicated business bank account or sub-account when possible.
  4. Prepare Schedule C: Report gross receipts, subtract allowable business expenses (see next section), and calculate net profit or loss.
  5. Calculate Schedule SE: Use net earnings from Schedule C to compute SE tax owed.
  6. Determine estimated taxes: If you expect to owe $1,000 or more in tax after credits and withholding, plan quarterly estimated tax payments to avoid penalties. Follow IRS Form 1040‑ES guidance.
  7. File Form 1040: Include Schedule C and Schedule SE with your tax return.

Key deductions gig workers should know

Deductions reduce taxable income and SE tax liability. Common, substantiable expenses include:

  • Vehicle expenses: Choose the standard mileage rate or actual expenses (fuel, repairs, depreciation). Keep a mileage log or use an app to track business miles.
  • Supplies and equipment: Phone costs (business portion), tools, delivery bags, or equipment related to your gig.
  • Fees and commissions: Platform fees, credit card processing charges, and service fees.
  • Home office deduction: If you use a specific area of your home exclusively and regularly for business, you may qualify for a home office deduction — follow IRS rules carefully to avoid audits.
  • Insurance, advertising, and continuing education relevant to the gig.

Documentation is critical. The IRS expects receipts, invoices, and contemporaneous records; for vehicle use, a mileage log with dates, business purpose, and miles driven is standard.

Real-world example

Maria drives for a delivery app. In 2024 she received $28,000 in gross payments and paid $2,000 in platform fees and $5,000 in vehicle costs (fuel, insurance portion, repairs). On Schedule C she reports $28,000 gross receipts and subtracts $7,000 in allowable expenses for a net profit of $21,000. She then completes Schedule SE to calculate SE tax on her net earnings, pays estimated taxes quarterly, and deducts half the SE tax on Form 1040 as an adjustment to income.

Quarterly estimated taxes — why they matter

Because gig platforms rarely withhold federal income or SE tax, you usually must pay estimated taxes quarterly if you expect to owe $1,000 or more when you file. The IRS generally requires you to pay either:

  • 90% of your current year tax liability, or
  • 100% of your prior year’s tax liability (110% if your adjusted gross income was over a specified threshold the prior year).
    Failing to make sufficient estimated payments can trigger underpayment penalties. Use Form 1040‑ES to calculate and submit payments.

Common mistakes I see in practice

  • Relying only on 1099s: Platforms sometimes underreport or issue 1099s in ways that don’t match your records — always reconcile.
  • Poor expense documentation: Vague or missing receipts lead to lost deductions or IRS adjustments.
  • Misclassifying income: Treating payments that are taxable as reimbursements can create trouble on audit.
  • Forgetting the $400 SE filing rule: Even if you think you owe little, $400+ net self-employment income triggers Schedule SE.

How to reduce audit risk

  • Keep contemporaneous records: receipts, mileage logs, invoices, and a clear business purpose for expenses.
  • Avoid inflated deductions: Claim what you actually used for business; be prepared to explain estimates such as the business-use percentage of cell phone costs.
  • Use consistent methods: If you switch expense methods (for vehicles, for example), document the reason and follow IRS rules for changes.

State taxes and other forms to consider

State filing rules vary. Many states tax business income similarly to federal rules, and you may owe state income tax, sales tax (if selling goods), or local business taxes. Also consider:

  • Form 1040X: If you need to amend a previously filed federal return.
  • Form 8829: For detailed home office expenses (if you choose to use this form rather than the simplified home office method).

When to get professional help

Hire a tax advisor or CPA if you:

  • Have complex income across many platforms, or
  • Are unsure whether payments are business income vs personal or employee wages, or
  • Are facing an IRS notice or audit.

In my practice as a financial educator and CPA, I’ve found that a short consultation to set up bookkeeping and estimated tax reminders saves most gig workers far more in taxes and penalties than the advisor fee.

Further reading on FinHelp:

Final notes and disclaimer

This article explains common federal filing requirements for gig workers and links to IRS guidance current as of 2025. It is educational and not a substitute for personalized tax advice. Tax situations vary — consult a tax professional for advice tailored to your circumstances.