The gig economy is booming, but if you’re a gig worker, you may be wondering how taxes work. Unfortunately, no one is immune from taxes, and chances are you’ll still have to pay. But taxes look different for gig workers and traditional employees. Here’s everything you need to know.
Am I a gig economy worker?
A gig economy worker is simply another term for a freelancer or independent contractor, so if you fall into either of those categories, you’re a gig worker.
Here are a few examples of gig workers:
A writer paid per article, word, or hour
A graphic designer who charges by the hour
A photographer who charges per photo session
You may also be a gig worker if you’re self-employed.
In short, you may be a gig worker if you:
Charge by the hour, word, or project
Charge a flat rate per session
Are self-employed
Work as a contractor, independent contractor, or freelancer
Do I have to pay taxes on my gig income?
If you make above a certain amount, then yes, you do have to file and pay taxes. For 2023, that amount is $400. So, if you made $400 or more in self-employment income in the 2023 tax year, you’re required to report that income and pay taxes on it.
How do I pay taxes on my gig income?
If you worked for an employer, you would have taxes withheld from your paycheck, but since you don’t, it’s your job to figure out how much you owe and when.
Rather than paying everything at the end of the year, the IRS requires you to pay taxes as you earn income. This is easy if you have a 9-5 job, as the money gets taken out of your paycheck immediately. But if you’re self-employed, you’re required to pay estimated quarterly taxes.
Do I have to pay quarterly taxes?
If you expect to owe $1000 or more in taxes, you’re required to make estimated quarterly tax payments. You can use the Estimated Tax Worksheet on IRS Form 1040-ES to figure out whether or not you need to pay quarterly taxes. This will also help you calculate how much to pay.
When do I pay quarterly taxes?
For 2023, quarterly taxes are due on the following dates:
For the period Jan 1 - March 31, 2023: Due April 18, 2023
For the period April 1 - May 31, 2023: Due June 15, 2023
For the period June 1 - August 31, 2023: Due September 15, 2023
For the period September 1 - December 31: Due January 16, 2024
For 2024, quarterly taxes are due on the following dates:
For the period Jan 1 - March 31, 2024: Due April 15, 2024
For the period April 1 - May 31, 2024: Due June 17, 2024
For the period June 1 - August 31, 2024: Due September 16, 2024
For the period September 1 - December 31: Due January 15, 2025
What happens if I don’t make quarterly payments?
As a self-employed worker, the IRS requires you to file and pay your taxes quarterly, even if you expect to get a refund at the end of the year. If you don’t pay enough taxes, or if you don’t pay by the deadline, you may be charged a penalty fee for underpayment.
If you’re a farmer or fisherman, however, you may not have to make quarterly payments. You can find more information in the IRS’ Small Business and Self-Employed Tax Center.