Gig economy taxes catch people at the same moment every year. The work went well, the money landed in your bank account, and then an eerily large number shows up at the bottom of your tax return in April.

That’s because nothing is withheld from gig income the way it is from a salary. For some, that’s the appeal. Who doesn’t love a bigger paycheck?

Start with what you owe

Look at a pay stub from a regular job. There’s a line for Social Security and another for Medicare, together about 7.65% of the paycheck. What the stub doesn’t show is that the employer pays that same amount again on your behalf. The government collects 15.3% in total.

Gig work removes the employer. Nobody is paying the other half, so you pay all of it. That’s the self-employment tax: 15.3%, made up of 12.4% for Social Security and 2.9% for Medicare.

Federal income tax is then calculated separately on that same money, and most states take a cut as well.

This is where first-year gig workers get caught. Gig platforms deposit the whole amount and leave the arithmetic to you.

A common rule of thumb is to move 25% to 30% of every payout into a separate account the day it lands. The alternative is scrambling for the money in April.

Not everyone gets a 1099-K

A 1099-K is the gig work version of a W-2. The platform you work through sends a copy at the end of the year, one to you and one to the IRS, showing what you were paid. The difference is that a W-2 shows tax already taken out. A 1099-K shows none.

A lot of gig workers won’t get one. For 2026, a platform only has to send one after your payments pass $20,000 across more than 200 transactions, though some send them below that anyway.

That doesn’t mean the money isn’t taxed. The IRS Gig Economy Tax Center says it plainly: you report gig income whether a form shows up or not, cash included.

It is crucial to keep documentation of what you are paid so you know what you owe.

Document your deductions

Some of what you spend to do the work comes off what you get taxed on. Mileage, a home office, and sometimes part of your phone bill count toward deductions.

It is crucial to keep documentation of what you spend, because that’s what proves the deduction. Keep documentation as you go. Come tax season, you’ll be glad you did.

You don’t have to figure this out alone

Most gig workers handle their taxes with software. Programs built for self-employed filers walk you through it, ask about mileage and home office use, and do the math as you go. AFE members get a discounted filing option through TurboTax that covers gig income and deductions. And if your situation gets complicated, a tax professional is worth the money.