What is the Gig Economy?
The gig economy—also called sharing economy or access economy—is activity where people earn income providing on-demand work, services or goods. Often, it’s through a digital platform like an app or website.
Gig Economy Income is Taxable
You must report income earned from the gig economy on a tax return, even if the income is:
- From part-time, temporary or side work
- Not reported on an information return form—like a Form 1099-K, 1099-MISC, W-2 or other income statement
- Paid in any form, including cash, property, goods, or virtual currency
Expenses May be Deductible
Individuals involved in the gig economy may be able to deduct expenses related to their gig income, depending on tax limits and rules.
- Taxpayers may be able to lower the amount of tax they owe by deducting certain expenses.
- It is important for taxpayers to keep records of their business expenses.
Pay the Right Amount of Taxes Throughout the Years
Individuals involved in the gig economy have two ways to cover their taxes due:
- If they have another job where they are considered an employee, they can submit a new Form W-4, Employee’s Withholding Certificate to their employer to have more taxes withheld from their paycheck to cover the tax owed from their gig economy activity.
- They can make quarterly estimated tax payments throughout the year.