The Tax Talk Every Independent Worker Needs

When you work gigs, you’re self-employed in the eyes of the IRS. That means there’s no automatic withholding. You’re the one responsible for tracking what you earn and paying your own taxes. One of the biggest pieces to understand is the self-employment tax. This covers both Social Security and Medicare, and for 2025, the rate is 15.3 percent. If you earn more than 400 dollars for the year, you’ll need to pay this tax even if you’re collecting Social Security benefits or are already retired. That part surprises a lot of people.

The good news is that you can deduct half of that self-employment tax from your income when you file. It doesn’t make the tax disappear, but it does take some of the sting out of it.

Another thing to keep on your radar is estimated tax payments. Since nothing’s taken out of your earnings automatically, the IRS wants you to make payments throughout the year. These are due in April, June, September, and January. If a deadline falls on a weekend or holiday, it moves to the next business day. Missing payments or coming up short can lead to penalties, even if you qualify for a refund later. That’s why a lot of experienced gig workers set aside 25 to 30 percent of their pay as they go. It makes life a lot easier come tax time.

Tracking your earnings matters too. Some companies will send you a 1099 if you make over 600 dollars, but not all of them will. And even if you don’t get a form, you still need to report that income. That’s where solid recordkeeping comes in. Use a spreadsheet, accounting software, or even just the notes app on your phone. Whatever you use, keep it updated and consistent.

There’s a silver lining here. When you’re self-employed, you can also deduct a lot of your business-related expenses. That includes things like:

• Vehicle mileage and maintenance

• Home office use

• Marketing or advertising costs

• Professional services like tax prep or legal advice

These deductions reduce your taxable income, which means you pay less overall. But to take advantage of them, you’ll need to keep receipts and documentation. If the IRS ever audits you, you’ll want to be ready.

It’s also important to remember that taxes don’t stop with the IRS. Depending on where you live, you may owe state or city income taxes too. Some places require self-employed workers to get a business license or file extra paperwork. If you’re unsure, it’s worth looking into your local requirements so nothing slips through the cracks.

To keep things simple, here are four tips to stay in control:

• Set aside part of your income for taxes as you earn it

• Track all of your income, even without a 1099

• Keep receipts for anything you might deduct

• File on time and follow up on any letters or notices you receive

And if you ever feel unsure about any part of the process, talk to a tax professional. They can help you understand your deductions and make sure you’re filing everything correctly.

Being self-employed comes with responsibilities. But it also comes with opportunity. When you plan ahead, stay organized, and know what to expect, you get to keep more of what you earn and avoid any big surprises. Taxes might not be fun, but with the right tools and mindset, they don’t have to be a headache either.