Earning money as a rideshare driver, food delivery courier, freelancer, or platform worker means handling taxes very differently than a W-2 employee. No one withholds taxes from your earnings, you can deduct legitimate business expenses, you may need to pay quarterly estimates, and you’ll likely receive Form 1099-K, 1099-NEC, or both. This guide walks through the basics of what gig workers actually need to know to avoid surprises and minimize what they owe.
Gig Income Is Self-Employment Income
To the IRS, gig work is self-employment — even if you also have a regular W-2 job. That means two important things:
- Self-employment tax applies on top of regular income tax. SE tax is 15.3% (12.4% Social Security + 2.9% Medicare) on net earnings, up to the Social Security wage base. As an employee, your employer would split that with you; as a gig worker, you pay both halves.
- Business deductions are available. Mileage, phone bills (business portion), platform fees, supplies, and a long list of other expenses can offset your gross gig income before any tax is calculated.
Net is what counts. If you earned $20,000 driving for Uber and had $7,500 in deductible expenses (mostly mileage), your net self-employment income is $12,500. SE tax and income tax both apply to that lower number — not the $20,000 gross.
The 1099-K and 1099-NEC Forms
Two main forms report your gig earnings:
- 1099-NEC (Nonemployee Compensation) — sent by clients or platforms that paid you at least $600 in a year for services. Common for freelancers, consultants, and some platform workers.
- 1099-K (Payment Card & Third-Party Network Transactions) — sent by payment processors (PayPal, Venmo for business, Stripe, Square) and platforms that handle transactions on your behalf (Uber, Lyft, DoorDash, eBay, Etsy). The IRS has been phasing in lower reporting thresholds; for tax year 2025 the threshold is $2,500, and it drops to $600 in 2026.
Whether or not you receive a form, you owe tax on the income. The 1099 just tells the IRS what to look for. Keep your own records of every dollar earned, every mile driven, and every business expense.
The Mileage Deduction
For rideshare and delivery, the standard mileage deduction is usually the single biggest tax saver. For 2025, the IRS rate is 70 cents per business mile. That covers gas, depreciation, maintenance, insurance, and registration — a flat per-mile amount instead of tracking each expense individually.
You can only deduct miles driven for business: pickup to drop-off, time spent online and available, and any miles between deliveries. Personal driving doesn’t count. Use a mileage tracking app (MileIQ, Stride, Hurdlr, Everlance) or your platform’s reports; the IRS expects contemporaneous records, not estimates after the fact.
Alternative: the actual expense method. You can deduct your share of gas, repairs, insurance, depreciation, and other car costs based on the business-use percentage of your vehicle. This sometimes beats mileage for high-cost vehicles, but requires much more recordkeeping. Most gig workers use standard mileage.
Common Deductible Expenses
- Platform fees and commissions — the cut Uber, DoorDash, or Etsy keeps before paying you
- Phone — the business-use percentage of your bill (be conservative; 50% is a common reasonable estimate for gig drivers)
- Supplies and tools — delivery bags, dash mounts, ride-share signage, software subscriptions tied to your work
- Health insurance premiums — the self-employed health insurance deduction lets you deduct premiums above the line if you don’t have access to a spouse’s employer plan
- Retirement contributions — a SEP-IRA or Solo 401(k) can shelter a substantial chunk of self-employment income; contributions reduce taxable income
- Home office — only if you have a dedicated space used exclusively for business (rare for rideshare; more common for freelance work)
Quarterly Estimated Taxes
If you’ll owe $1,000 or more at tax time from gig work alone, you generally need to pay quarterly estimates. The four IRS payment dates each year are roughly April 15, June 15, September 15, and January 15 (of the next year). Pay too little and you’ll face an underpayment penalty even if your total tax is fully paid by April.
Two easy ways to estimate:
- Safe harbor rule — pay 100% of last year’s total tax (110% if your prior-year AGI was over $150,000). If you do that across the four quarters, you owe no underpayment penalty regardless of what you actually owe this year.
- Set-aside method — transfer 25-30% of every gig payment into a separate savings account. Use it to pay your quarterlies. Adjust upward if your effective rate runs higher.
If you also have W-2 income, you can ask your W-2 employer to withhold extra to cover gig taxes via Form W-4 step 4(c) — that avoids quarterly filings entirely.
Schedule C and Schedule SE
At tax time, gig income and expenses go on Schedule C (Profit or Loss from Business). The net profit from Schedule C flows to your 1040 as additional income, and to Schedule SE, which calculates self-employment tax. You’ll also be able to deduct half of your SE tax as an above-the-line deduction on your 1040.
Most tax software handles this seamlessly. If your gig income is straightforward (one or two platforms, mileage tracked, no employees, no inventory), TurboTax Self-Employed, H&R Block Premium, or FreeTaxUSA all work well. For more complex situations — multiple platforms, payroll, depreciation, partnerships — consider hiring a CPA or enrolled agent.
Educational only. Tax laws, mileage rates, and 1099-K thresholds change annually. Verify current rules at IRS.gov or with a qualified tax professional, especially before making material decisions about retirement contributions, vehicle purchases, or business structure.