No one likes tax time, but for gig economy workers, it can definitely seem like a giant headache. If you are working side gigs either as main gigs or to make ends meet on the side, you’re likely to have a lot of questions when it comes to tax time.
We’re not tax experts, so it’s always best to talk to an accountant or tax professional about your unique situation. However, here are a few guidelines to keep in mind.
What do I need to report for taxes?
The IRS lists several categories as “taxable income.” Taxable income means you have to report the income when you file for taxes, and the amount will determine your taxes.
- Salary – If you work a traditional job with a set salary (hourly or otherwise), it is taxable. Luckily, your employer likely takes these taxes out for you. Keep in mind that salaries include any bonuses or commissions.
- Freelance Income – This is where most of the gig economy falls. Freelance income includes anything from hourly wages paid for short term projects to rideshare payments to gift cards you get for taking surveys online. Gig economy platforms don’t keep track of taxes on their wages for you, but that doesn’t mean the IRS doesn’t hold you liable for reporting them.
- Tips – Any tips you earn, whether as a server or as a gig economy worker, have to go on your tax filing as well.
- Income from Outside the U.S. – Does it matter if your gig economy work is through a platform with its base overseas? No. If you live in the U.S. and work in the U.S., you need to report income in the U.S.
- Bartering – If you barter or swap items or services as part of the gig economy or another side gig, you have to report this income. If this is part of your work, check out the IRS website specifically for the bartering economy.
- Gambling – The IRS lists any kind of gambling winnings—from horse racing to the lottery—as taxable.
- Income from hobbies – If you sell crafts, antiques, or old movies on eBay, that income is taxable.
- Alimony – This is money that you get from a spouse after a divorce, and the IRS considers it taxable.
What is nontaxable income?
Not all income is taxable, even if all the money you make through the gig economy is. When you go to file your taxes, keep in mind that these can stay off your filing.
- Carpool money – If you carpool to and from work (any work—including gig economy) and people give you money for it, it’s not taxable. This might sound like great news for the gig economy rideshare drivers, but unfortunately, rideshare or carpool businesses do not fall under this exception.
- Child support – Child support money does not count as taxable per the IRS. Alimony is, child support is not. Confusing, right?
- Olympic medals – If you’re a world class athlete, you’re probably not also driving for Uber, but in the event that you are, you don’t have to pay taxes on your medals from the next Olympic Games.
As you can see, this is a pretty short list. What does that mean for tax time? It means that most if not all of your income is taxable. All of your income from the various gig economy platforms falls under the “freelance income” category for taxable income. As a gig economy worker, this may mean adding up earnings from multiple platforms, deducting expenses from multiple deduction columns, and a lot of other complicated paperwork. If you’re looking for a little more technical help with the paperwork side of things, head over to our article “How Couriers File Their Taxes.”
