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Freelancers, Side Hustlers & Gig Workers: The Tax Guide You Never Knew You Needed

Freelancers, Side Hustlers & Gig Workers: The Tax Guide You Never Knew You Needed​

 

Congratulations! You’ve taken control of your income, said goodbye to the traditional 9-to-5 (or at least added a lucrative side gig), and embraced the world of freelancing, side hustling, and gig work. But with great income flexibility comes…tax season. And if you’ve never dealt with self-employment taxes before, you might be in for a bit of a surprise.

 

Don’t worry, we’ve got your back. Here’s everything you need to know to survive tax season as a freelancer or gig worker without pulling your hair out.

 

Step 1: Know That Taxes Aren’t Automatically Taken Out (Yes, You Have to Pay Them)

Unlike traditional employees, freelancers and gig workers don’t have taxes automatically withheld from their earnings. When you get paid, you’re getting the full amount—but the IRS still expects their cut.

 

This means:

  1. You have to set aside money for taxes yourself (no paycheck deductions doing it for you).
  2. You may need to pay estimated taxes throughout the year.
  3. If you don’t, you might get hit with a big tax bill (and possible penalties) at the end of the year.

 

A good rule of thumb is to set aside 25-30% of your freelance income for taxes. It might seem like a lot, but trust us—it’s better than scrambling to pay a huge bill later.

 

Step 2: Know the Forms

If you’re used to a W-2, those days are over. Instead, freelancers and gig workers usually receive 1099 forms from clients.

 

  • 1099-NEC
    If you earned $600 or more from a single client, they should send you this form.
  • 1099-K
    If you earned over $20,000 and had more than 200 transactions through platforms like PayPal, Venmo, or Uber, you’ll get this form.
  • No Form? No Problem!
    Even if you     don’t get a 1099, you still have to report all income you made. (Yes, even that $599 client.)

 

Keep track of all payments received, not just what’s reported on 1099s. The IRS expects you to report your full income, even if no official tax form arrives in the mail.

 

Step 3: Learn About the Self-Employment Tax (It’s a Real Thing, Unfortunately)

Freelancers have to pay self-employment tax, which covers Social Security and Medicare. Normally, when you have a regular job, your employer pays half of these taxes. But when you work for yourself, you’re the employer, too…so you pay both halves.

 

  • The self-employment tax rate is 15.3% of your net income.
  • This is on top of regular income tax.

 

The good news? You can deduct half of your self-employment tax when filing. It’s not a full escape, but hey, every little bit helps!

 

Step 4: Take Advantage of Deductions (Don’t Pay More Than You Have To!)

 

One of the perks of freelancing? Tax deductions! You can subtract legitimate business expenses from your income, which lowers the amount you owe.

 

Common deductions include:


Home Office Deduction

  If you use a space exclusively for work, you may be able to deduct part of your rent or mortgage.


Business Equipment & Software

  Laptops, cameras, design programs, invoicing tools, and more.


Mileage & Travel

  If you drive for work (excluding commuting), you may be able to deduct mileage.

 

Phone & Internet

  If you use your phone and internet for business, part of the cost may be deductible.

 

Keep records of everything!

  The IRS loves documentation, and having receipts, invoices, or logs can save you if you ever get audited.

 

Step 5: Don’t Forget About Quarterly Taxes (Yes, They’re a Thing)

Freelancers who expect to owe at least $1,000 in taxes typically need to pay estimated taxes quarterly—instead of waiting until April.

 

Quarterly Tax Deadlines:

       April 15

       June 15

       September 15

       January 15 (of the next year)

 

Skipping quarterly payments could result in penalties and interest. It’s better to pay in smaller chunks throughout the year than to owe a massive bill in April.

 

Step 6: Get Organized (Your Future Self Will Thank You)

The biggest challenge for freelancers isn’t just doing the work—it’s keeping track of income, expenses, and taxes.

 

Best Practices for Staying Organized:

 

  • Use a separate bank account for business income and expenses.
  • Keep digital copies of receipts and invoices (apps like QuickBooks or Wave help).
  • Track mileage. Use apps such as MileIQ to make the tracking easier.
  • Regularly check your income and expenses so there are no surprises at tax time.

 

If taxes feel overwhelming, a tax professional can help make sure you’re paying the right amount while maximizing deductions!

 

Taxes Don’t Have to Be a Nightmare

Freelancing and side hustling give you freedom, but they also come with tax responsibilities. The key to making tax season painless? Be proactive, track everything, and don’t wait until the last minute.

 

Earn that freelance income, and tackle tax season like a pro!