Overview

Gig work includes freelance projects, delivery and rideshare, marketplace sales, and other platform-based jobs. The IRS expects you to report all income, whether or not you receive a 1099. Properly documenting income and legitimate business expenses reduces your taxable income and helps avoid audits or penalties (IRS: Report Gig Economy Income — https://www.irs.gov/businesses/small-businesses-self-employed/reporting-gig-economy-income).

Key tax forms and rules

Common, legitimate deductions

These expenses are deductible if they are ordinary and necessary for your trade or business:

  • Vehicle expenses: Choose the standard mileage rate or actual expenses (gas, repairs, insurance, depreciation). Track business miles with a log or app.
  • Home office: If you use part of your home regularly and exclusively for business, you can use the simplified method or regular method (IRS: Home Office Deduction — https://www.irs.gov/businesses/small-businesses-self-employed/home-office-deduction).
  • Supplies and equipment: Computers, phones, software, and tools used for work (apply depreciation rules when appropriate).
  • Platform fees and commissions: Marketplace or app fees paid to earn income.
  • Marketing, continuing education, and office expenses: Advertising, online subscriptions, course fees.

Practical recordkeeping tips

  • Record income immediately: save platform reports, 1099s, invoices, and bank deposits.
  • Keep receipts and categorize expenses monthly. A consistent folder or accounting app reduces mistakes.
  • For mileage, log date, purpose, starting and ending odometer or use a mileage-tracking app. The IRS may request documentation in an audit.

How to choose between mileage and actual vehicle costs

  • Standard mileage is simpler: multiply business miles by the IRS per‑mile rate (IRS announces the rate annually).
  • Actual expenses require receipts and prorating items like gas, repair, insurance, and depreciation based on business use percentage.

Estimated taxes and self-employment tax

  • Self-employment tax covers Social Security and Medicare; it’s calculated on net self-employment income (Schedule SE).
  • Use Form 1040-ES or tax-software calculators to estimate quarterly payments. Missing required estimated payments can trigger penalties.

Common mistakes to avoid

  • Underreporting income: Report all earnings, even those without a 1099.
  • Mixing personal and business records: Keep separate accounts when possible.
  • Overstating deductions without documentation: Only claim expenses that are ordinary, necessary, and substantiated.

Where to get help and next steps

  • If your filing is straightforward, tax software for freelancers can guide you through Schedule C and deductions.
  • If you have complex issues (home office allocation, asset depreciation, multi-state work), consult a CPA or tax preparer.

Related resources on FinHelp

Authoritative sources

Professional disclaimer

This article is educational and does not replace personalized tax advice. For guidance tailored to your situation, consult a CPA or licensed tax professional.