Tax Tip 2023-85: Info to help gig economy workers stay on top of their tax responsibilities

IRS Tax Tips

June 27, 2023

Issue Number:? Tax Tip 2023-85

-----------------------------------------------------------------------------------

Info to help gig economy workers stay on top of their tax responsibilities

The gig economy - also called sharing economy or access economy - is a popular way for people to earn income by providing on-demand work, goods or services. Some people take up gig work on a part-time basis, and for others the job is done full-time. Income from gig work ? such as driving a car for booked rides, selling goods online, renting out property or providing other on-demand work ? is taxable and must be reported as income on the worker's tax return.

Gig work is taxable

Earnings from gig economy work are taxable regardless of whether an individual receives information returns. Due to reporting requirements.PDF, gig economy workers may get a Form 1099-K if their income exceeds $600.
Earnings from gig work include payments by credit card, cash, property, goods or virtual currency.
Gig workers may be required to make quarterly estimated tax payments.
If gig workers are self-employed, they must pay all Social Security and Medicare taxes on their income from the gig activity.

Proper worker classification
It?s important that the taxpayer is correctly classified while they provide gig economy services. Gig workers may be classified as independent contractors by digital platforms that match workers? services with customer needs.

This means the business, or the platform, must determine whether the individual providing the services is an employee or independent contractor.
Taxpayers should review the worker classification information on IRS.gov to see how they should be classified.
Independent contractors may be able to deduct business expenses depending on tax limits and rules. It?s important for taxpayers to keep records of their business expenses.

Paying the right amount of taxes throughout the year

Good recordkeeping is important to navigate tax rules successfully and avoid mistakes when doing gig work.
An employer typically withholds income taxes from their employees' pay to help cover income taxes their employees owe.
Gig economy workers who aren't considered employees have two ways to cover their income taxes:
?
- If they have another job as an employee, submit a new Form W-4 to their employer to have more income taxes withheld from their paycheck.
- Make quarterly estimated tax payments to help pay their income taxes throughout the year, including self-employment tax.

The Gig Economy Tax Center on IRS.gov answers questions and helps gig economy taxpayers understand their tax responsibilities.

More information:
Gig economy and your taxes: things to know, Publication 5369.PDF
Independent Contractor or Employee, Publication 1779.PDF
Is My Residential Rental Income Taxable and/or Are My Expenses Deductible?

?? ?? ?

Thank you for subscribing to IRS Tax Tips, an IRS e-mail service. For more information on federal taxes please visit IRS.gov.

This message was distributed automatically from the IRS Tax Tips mailing list. Please Do Not Reply To This Message.

Update your subscriptions, modify your password or email address, or stop subscriptions at any time on your Subscriber Preferences Page. You will need to use your email address to log in. If you have questions or problems with the subscription service, please contact subscriberhelp.govdelivery.com.

This service is provided to you at no charge by the Internal Revenue Service (IRS).

This email was sent to [email protected] by: Internal Revenue Service (IRS) ? Internal Revenue Service ? 1111 Constitution Ave. N.W. ? Washington DC 20535

Useful Links:

News Essentials

The Newsroom Topics

IRS Resources

Issue Number:? Tax Tip 2023-85