If you drive for a rideshare app, deliver groceries, or rent out a spare room, your tax paperwork may look different this year.
A phased-in reporting change means platforms like DoorDash, Uber, and Airbnb are sending more detailed earnings information to the IRS than they used to.
The shift traces back to a 2021 law that lowered the threshold for third-party payment platforms to issue a Form 1099-K.
After several delays, the IRS is now moving forward with a $5,000 threshold for the 2024 tax year, dropping to $2,500 next year and $600 after that.
Here's why that matters: in the past, many casual sellers and side hustlers flew under the radar because the old threshold was $20,000 in payments and 200 transactions.
Now, a part-time dog walker earning $6,000 could receive a form they never got before.
It's an information return that also goes to the IRS, which means the agency can match what you report against what the platform says you earned.
Missing or mismatched numbers are a classic trigger for letters and audits.
Gig workers still owe self-employment tax, which covers Social Security and Medicare, on top of regular income tax.
That's 15.3% on net earnings, and it catches many first-timers off guard because it isn't withheld from each payment the way it is at a traditional job.
The good news is that you can deduct ordinary and necessary business expenses.
Mileage is often the biggest one for drivers.
The IRS rate for 2024 was 67 cents per mile, and tracking every trip with an app or a logbook can wipe out a sizable chunk of what you owe.
Other deductions worth knowing: your phone bill if you use it for work, a portion of your home internet, delivery bags, car maintenance, and the fees apps charge you.
If you're audited, documentation is your best defense.
Quarterly estimated payments are another sticking point.
If you expect to owe $1,000 or more for the year, the IRS generally wants payments in April, June, September, and January.
Skip them and you can face an underpayment penalty even if you pay in full come April.
One more wrinkle: some states have their own thresholds and rules that don't match the federal ones.
If you worked across state lines or moved during the year, you may need to file in more than one place.
If your gig income is small and this is your first year getting a 1099-K, a few hours with a tax preparer or a free IRS Free File option could save you real money.
The cost of getting it wrong usually runs higher than the cost of getting help. **Our take:** The lower reporting threshold isn't a money grab aimed at side hustlers so much as the IRS finally catching up to how Americans actually earn.
Treat the new form as a nudge to track expenses year-round instead of scrambling in April.
Final Thoughts
A little bookkeeping now beats a surprise letter later.