If you drive for Uber, deliver for DoorDash, or sell handmade candles on Etsy, there's a good chance the money you set aside for taxes this year won't cover what you actually owe.
It's a 2025 change to how the IRS treats third-party payment platforms, and it's catching thousands of freelancers and gig workers completely off guard.
Apps like Venmo, PayPal, Cash App, and Etsy were supposed to start sending tax forms for anyone who earned $600 or more in a year.
After years of delays, that threshold is finally real for 2025 income.
If you took in $600 through one of these platforms, expect a 1099-K in your mailbox or inbox by the end of January.
The confusion comes from a paperwork quirk.
A 1099-K reports gross payments, not profit.
Sell a used couch for $700 on Venmo and that number shows up on a form, even though you didn't make a dime.
Meanwhile, your actual delivery income gets reported without any deduction for gas, phone bills, or the miles you put on your car.
Workers who set aside 15% of earnings are discovering that self-employment tax alone eats 15.3%, and that's before federal and state income tax.
A 2024 survey from the Freelancers Union found that roughly a third of independent workers had underpaid their taxes the prior year, and many had no idea until the notice arrived.
The good news is that there's still time to soften the blow.
If you haven't filed yet, run the numbers before you guess.
Track your mileage with an app, add up your phone, data, and supplies, and subtract every legitimate business expense.
A $30,000 gross year can drop to $20,000 in taxable income once deductions are applied, which can be the difference between owing $200 and owing $2,000.
If you do owe more than you have, don't ignore the letter.
The IRS offers installment plans, and penalties for not filing are far steeper than penalties for paying late.
Setting up a payment plan online takes about ten minutes and can stop the interest from snowballing.
One more thing: quarterly estimated payments aren't optional for gig workers.
If you expect to owe $1,000 or more this year, the IRS wants money in April, June, September, and January.
Skipping those deadlines triggers an underpayment penalty even if you pay everything in full by April 15.
The bigger lesson here is that the gig economy has quietly turned millions of Americans into small business owners, whether they signed up for that title or not.
Nobody hands you a benefits packet or a withholding form when you download a delivery app.
My take: the tax code hasn't caught up to how people actually work, and workers are left to figure out the rules alone.
If you earn money through an app, treat 25 to 30 percent of every payout as money that was never yours.
Final Thoughts
It stings in the moment, but it beats a surprise bill in April.