If you drove for Uber, delivered for DoorDash, or sold handmade candles on Etsy last year, the IRS has a message: you may owe more than you think.
Gig platforms don't withhold taxes the way a regular employer does.
That means every check you deposited was the full amount — and Uncle Sam's cut is still sitting there, unpaid, quietly accruing interest.
The first shock for many gig workers is the self-employment tax.
Employees split payroll taxes with their employer, each paying 7.65 percent.
Independent contractors pay both halves, roughly 15.3 percent on net earnings, on top of regular income tax.
That gap blindsides people who assume their tax bill will look similar to a W-2 job.
Platforms like Uber and DoorDash issue 1099 forms, but they don't track your actual profit.
If you grossed $40,000 but spent $9,000 on gas, maintenance, phone bills, and supplies, you're taxed on the difference — but only if you actually claim those deductions and keep receipts.
Claim something you can't back up, and an audit gets ugly.
The mileage deduction is where the real money hides, and where the real confusion lives.
For the 2024 tax year, the standard mileage rate is 67 cents per mile.
A full-time driver logging 30,000 business miles can deduct over $20,000 — often more than their actual car expenses.
But you have to log those miles contemporaneously.
A shoebox of gas receipts won't cut it if the IRS asks questions.
There's another trap: quarterly estimated payments.
The U.S. tax system runs on pay-as-you-go.
If you owe more than $1,000 at filing time, the IRS can slap on an underpayment penalty, even if you pay your full balance by April 15.
Many first-year gig workers learn this the hard way, then scramble to catch up the following year.
Scammers know gig workers are stressed and often inexperienced with self-employment rules.
Watch for texts or emails claiming to be from the IRS demanding immediate payment via gift card or wire transfer.
The IRS does not text you out of the blue, does not demand crypto, and does not threaten arrest over the phone.
Tax prep software companies and storefront preparers, who market heavily to gig workers each spring.
Some charge $200 or more for a return that a free filing option could handle for a simple 1099.
Meanwhile, the platforms themselves face little pressure to make withholding easier — they save on payroll taxes and administrative costs by treating you as a contractor.
Set aside 25 to 30 percent of every gig payment in a separate savings account.
Make quarterly payments if you expect to owe.
And if your situation is complicated, paying a professional once may cost less than guessing wrong.
The gig economy sells freedom and flexibility.
Final Thoughts
What it doesn't advertise is that you've also been hired as your own unpaid accountant, payroll department, and compliance officer.