Roughly 1 in 6 American workers now earns money through gig apps, and a growing number of them are discovering something unpleasant when they file their taxes: a bill instead of a refund.
Delivery drivers, rideshare operators, and freelance taskers often have nothing withheld from their paychecks all year.
When April arrives, the full tax load lands at once.
Here's the math that catches people off guard.
A gig platform like a delivery app typically reports your earnings on a 1099 form once you clear $600 for the year.
That means no employer is covering half your Social Security and Medicare taxes.
You owe both halves yourself — 15.3 percent of your net profit right off the top, on top of regular income tax.
The word "net" matters more than most new drivers realize.
If you earned $20,000 driving last year but spent $6,000 on gas, maintenance, phone bills, and supplies, you're taxed on $14,000, not $20,000.
Skip those deductions and you'll overpay by hundreds.
Miss them entirely and you may still owe more than you expected.
Mileage is the single biggest write-off most drivers leave on the table.
The IRS standard rate for 2024 was 67 cents per mile, and it covers gas, wear, and depreciation in one number.
A driver logging 15,000 business miles can deduct over $10,000.
That can wipe out a tax bill completely — but only if you tracked the miles.
A notebook or a free tracking app beats trying to reconstruct a year of driving from memory in March.
There's another trap: the underpayment penalty.
The IRS expects taxes paid throughout the year, not just in April.
If you owed more than $1,000 last year and didn't make quarterly payments, you can get hit with interest and fees on top of what you owe.
Setting aside 25 to 30 percent of each payout in a separate savings account is the simplest defense.
Some states with no income tax still charge on self-employment earnings, and city-level taxes in places like New York and Philadelphia apply to gig income.
A driver in a major metro area can face three layers of tax on the same $15,000.
IRS Free File works if you earned under $79,000, and Volunteer Income Tax Assistance sites handle self-employment returns at no cost for qualifying filers.
Software like FreeTaxUSA or Cash App Taxes walks you through 1099 entries for under $20.
Just avoid any preparer who promises a bigger refund for a percentage cut — that's a red flag, not a deal.
One more deadline worth circling: quarterly estimated payments for 2025 are due April 15, June 16, and September 15.
Miss them and next spring's surprise gets bigger, not smaller.
The gig economy sold workers on freedom, and for many it delivers.
But freedom from withholding means you're now your own payroll department.
Final Thoughts
The drivers who treat that 25 percent set-aside like a bill they can't skip are the ones who sleep fine in April — everyone else learns the lesson the hard way, usually just once.