If you earn money through a rideshare app, delivery platform, freelance marketplace, or any other gig arrangement, that income is taxable and must be reported on your federal return — even if you never receive a tax form. The IRS treats gig workers as self-employed for most purposes, which triggers obligations beyond ordinary income tax, including self-employment tax on net earnings. IRS Publication 334 and the IRS gig economy tax center at irs.gov describe the full framework.
How gig income is reported to you (and the IRS)
Platforms and clients report payments to gig workers using one of two forms:
Form 1099-NEC (Nonemployee Compensation) is issued by a payer who paid you $600 or more during the calendar year for services. This is the most common form for freelancers and independent contractors.
Form 1099-K (Payment Card and Third Party Network Transactions) is issued by payment settlement entities — including app-based platforms and payment processors — when payments routed through their systems meet reporting thresholds. The IRS has been adjusting the 1099-K reporting threshold; check irs.gov for the current applicable amount, as it has changed in recent years and may continue to change.
Important points:
- You owe tax on all gig income regardless of whether you receive a form. The $600 / threshold rules govern when payers must file; your obligation to report is not conditioned on receiving a form.
- 1099 income is not withheld from. No employer withholds income tax or self-employment tax from your app earnings the way an employer withholds from W-2 wages.
- If you have both W-2 employment and gig income, they are reported separately and combined on your return.
Self-employment tax basics
When you work as an employee, your employer pays half of Social Security and Medicare taxes on your behalf. Self-employed individuals pay both halves themselves through the self-employment tax, calculated on Schedule SE. The net self-employment tax rate is set by the IRS (described in Publication 334), and it applies to your net self-employment earnings — revenue minus allowable business expenses.
There is a deduction available for half of the self-employment tax you pay, which reduces your adjusted gross income. This is reported directly on Form 1040.
Estimated quarterly payments
Because no withholding occurs on self-employment income, the IRS generally expects taxpayers with significant self-employment earnings to make estimated tax payments four times per year using Form 1040-ES. Underpaying throughout the year can result in a penalty when the return is filed. The IRS provides a worksheet in the 1040-ES instructions to calculate what you owe each quarter.
Deductible business expenses for gig workers
Self-employed income is reduced by ordinary and necessary business expenses before self-employment tax and income tax apply. Common deductions for gig workers may include:
- Mileage or actual vehicle costs (for rideshare and delivery workers)
- A portion of your mobile phone bill used for business
- Supplies, equipment, and software used for freelance work
- Fees paid to platforms or payment processors
Personal expenses are not deductible. Mixed-use items (like a phone used for both personal and business) must be allocated based on actual business use. Keeping clear records is essential.
Recordkeeping for rideshare, delivery, and freelance workers
Good records protect you and support any deductions you claim. Maintain:
- A mileage log (date, start/end location, business purpose, miles) for every business drive
- Bank and app-platform earnings statements
- Receipts for all business purchases
- Invoices sent to clients and payments received
Most major rideshare and delivery platforms provide annual earnings summaries through their driver or dasher portals. Download and retain these each year.
Where to get help
Self-employment income, estimated payments, and expense tracking are areas where errors are common and consequences can include penalties and interest. A find a tax professional familiar with gig economy work can help you understand your obligations and keep proper records.
Sources
- IRS Publication 334, Tax Guide for Small Business (irs.gov)
- IRS Schedule SE instructions (irs.gov)
- IRS Form 1040-ES instructions (irs.gov)
- IRS Gig Economy Tax Center (irs.gov)