If you drive for Uber, deliver for DoorDash, or sell handmade goods on Etsy, there's a decent chance you're in for a surprise this tax season.
The money that landed in your account all year was never really all yours.
Roughly 15.3% of your net earnings goes to self-employment tax before federal income tax even enters the picture.
That's the part a lot of new gig workers miss.
When you're a regular employee, your boss quietly covers half of Medicare and Social Security.
When you're a gig worker, you cover both halves yourself.
On $40,000 of profit, that's about $6,120 just for those two programs, and the bill doesn't care whether you set anything aside.
The good news is that plenty of gig workers overpay simply because they don't know what they can write off.
Your phone bill, a portion of your internet, your car mileage, delivery bags, parking, and even some software subscriptions can all lower the number the IRS taxes.
The standard rate for 2024 was 67 cents per mile, and it adds up fast if you're on the road daily.
Uber and DoorDash may send a 1099 form, but nobody is setting money aside.
If you made more than $5,000 from a single platform, you'll likely get a 1099-NEC or 1099-K.
Even below that threshold, you still owe tax on the income.
There's no minimum that makes it disappear.
A simple fix is to open a separate savings account and move 25% to 30% of every payout into it the same day.
It stings at first, but it beats scrambling in April.
You can also make quarterly estimated payments, which the IRS actually prefers.
Miss those and you may owe a penalty on top of the tax itself.
If this all feels like too much, a tax preparer who works with gig clients often pays for themselves.
They know which deductions hold up and which ones invite an audit.
That's not a guarantee of savings, but it's usually cheaper than guessing wrong. **The takeaway:** Gig work is real work, and real work comes with real taxes.
The people who stay ahead of it aren't smarter than you, they just started setting money aside before the bill showed up.
Final Thoughts
Do that, track your miles, and this stops being a crisis and becomes just another line item.