Skip to Content
Husband and wife sitting on couch drinking coffee and talking about managing their money in their marriage.
Marriage and Money

Gig workers and taxes

Working for yourself is a great feeling, but figuring out how much you owe in taxes can be tricky.
Plenty of people are choosing to work independently. More than 36% of Americans participated in freelance work in 2022.1 When you're an independent worker, it's your responsibility to figure out how much you owe in taxes and make estimated payments throughout the year, whether you're doing part-time gigs for extra income or making a full-time living from odd jobs. Here, we'll cover the basics on what you need to know about filing taxes as a gig worker.

Do gig workers need a tax return?

Yes, if your net earnings from self-employment were at least $400. The IRS says that self-employed workers are considered those who are either:

What are estimated payments?

Estimated payments are payments that gig workers must make four times a year (each quarter) to cover the estimated taxes on the income they receive. Gig positions are unlike full-time employer positions because they don't have an employer withholding income tax, Social Security and Medicare taxes.

How do you calculate estimated payments?

The first thing you'll need is your prior year's annual tax return. You'll need this to help you fill out Form 1040-ES, which is the IRS' estimated tax form that will help you determine your estimated income and deductions. Making estimated payments isn't particularly straightforward if you're uncertain how much money you'll make during the year, if your income fluctuates from quarter to quarter, or if this is your first year being self-employed. All these circumstances will require you to estimate the amount of income you expect to earn for the year. This can be tricky, but don't worry - you can complete another Form 1040-ES to adjust your estimated tax for the next quarter if you realize you estimated your earnings too high or too low.

When are you supposed to pay your estimated taxes?

Four times a year you'll have to pay your estimated taxes and each period has a specific due date. You can pay online with IRS Direct Pay or by mail. If you mail your payment, and it's postmarked on or before the due date, the IRS will generally consider the payment on time. It's important to try to complete your estimated payments correctly because if the IRS determines that you didn't pay enough tax by the deadline of each payment period, you may be charged a penalty.

When it comes time to do your annual return, remember to double-check that you've taken all the right deductions. Hopefully, you've kept meticulous records and tracked all your expenses throughout the year so that you can deduct them from your payments. These include the cost of items such as office space, office supplies and travel expenses.

It may seem like a chore to calculate and pay your estimated tax four times a year, but if you do it right, you'll be thanking yourself when tax season rolls around, and you've already paid your estimated tax liability.

As with any tax matter, be sure to consult a qualified tax professional regarding your specific situation should you need assistance.

1. Ocho, How Many Freelancers Are in the US? August 9, 2023.

WEB.1228225.05.19

Arrows linking indicating relationship

Related Articles

A young couple working together on a laptop.

Pros and cons of a spousal cosign on a loan

Learn more

Married filing taxes jointly vs separately

Learn more
A wife with an awkward expression looking at her husband

Preparing for life's awkward moments

Learn more
All Learning Center articles are general summaries that can be used when considering your financial future at various life stages. The information presented is for educational purposes and is meant to supplement other information specific to your situation. It is not intended as investment advice and does not necessarily represent the opinion of Protective or its subsidiaries.

Learning Center articles may describe services and financial products not offered by Protective or its subsidiaries. Descriptions of financial products contained in Learning Center articles are not intended to represent those offered by Protective or its subsidiaries.

Neither Protective nor its representatives offer legal or tax advice. We encourage you to consult with your financial adviser and legal or tax adviser regarding your individual situations before making investment, social security, retirement planning, and tax-related decisions. For information about Protective and its products and services, visit www.protective.com.

Companies and organizations linked from Learning Center articles have no affiliation with Protective or its subsidiaries.