When you are working, most of the tax that you pay is already withheld by your employer, but it is different if you are doing a side hustle. It is because different rules are similar to freelancing if you work on more than a single job.

But how do you pay gig workers taxes? Let's discuss in this article in detail whether there are any non taxable side jobs or not.

What is Gig Work?

While there are many different kinds of side incomes, like making deliveries and taking smaller projects, the IRS has categorized them into gig work to make it easier for you to make tax payments on them. Most of these you acquire through a website, such as a platform, or gig work apps. Here are the most common ones that require you to pay gig workers taxes.

• Using a vehicle to make deliveries or work with apps like Uber to make rides.
• You are using your estate as a rental, even a part of it, like you do on Airbnb.
• Make smaller tasks for which you are paid.
• Giving your professional services as creative work.
• And many more.

What to Do When Paying Gig Workers Taxes?

Here are different steps that you should take care when you want to pay gig workers taxes.

Keeping Records of Your Gig Income

You must keep all digital and physical records of how much you make during gig work. Furthermore, you also need to save any record, such as receipts for expenses, to make deductibles that much easier.

Pay Your Estimated Gig Workers Taxes

There are many different nuances that you need to take care of. Here are some of them.

• No matter the gig type, If you are working for someone, then make sure that you are paying quarterly taxes. Learn more about W-4 forms, which will help you learn about withholding tax.
• There are four dates for the payments: April 15^th, July 15^th, September 15^th and finally January 15^th.
• You can quickly pay for these dates using the online tool or look up the 1040-ES form and make the necessary payment.
• You can use the above form or an app that helps you with it to estimate how much you need to pay each time.

Getting Ready to Start Filing

You need to familiarize yourself with the different forms that you need to fill out when filing. You can get more information about these different forms here. The most common of these forms are 1099-K, 1099-MISC, W-2, etc.

After you have chosen the proper filing document for gig workers taxes, you must report all of your income, no matter how small the gig is. Once you have written down all your income revenues, calculate and add the expenses. You can read more about what kind of expenses are deductible from your income tax filing.

Important Questions Regarding Gig Workers Taxes

Here are some of the most common questions that are asked when filing taxes. You should be aware of these so as to make proper filing.

How to Report Income from Side Hustles?

Most jobs and incomes are categorized into easy-to-manage and file sections. But if you have more varied jobs, the IRS requires you to file under different sections and asks you to fill out different forms. Most common jobs that are pretty similar to each other can be filed using Schedule C forms.

So, for example, if you sell bakery items online while also getting income from an Uber-like facility, both require Schedule C filing. But in these cases, you have to file twice, once for the bakery and the other for the ridesharing.

Only in the case if you work in a bakery but are selling online fresh bakery plus selling your services as bakery item decorator will you file under the same Schedule C.

How Do You File Extensions in This Case if You Aren’t Able to Pay?

There is a window of 6 months the first time you apply for an extension if you are unable to pay your tax bills. You do have to remember here that when you are filing gig workers taxes, you must pay the bill amount. Only the filing of the taxes in detail is covered under the extension you get approved.

You can take the e-filing route if you want easy and paperless filing. You can learn more about it on the IRS website.

Are There Any Penalties for Late Filing?

The deadline for your income through gigs, or any other income for that matter, usually falls in mid-April each year. So if you aren’t able to pay your taxes before then, then you will be charged a penalty of 5%. This 5% penalty is for each month until you have finally made the payment. The good thing is you can pay as much as you can if you notify the authorities to forego the penalty. You have to share proof of why you were unable to fulfill this requirement.

How Long Should You Keep Tax Records of Your Income?

Three years is the minimum to keep your tax records. It doesn't matter which date you paid the taxes or the date you filed them; as long as it was the last communication, you should keep the records after that date.

There are certain scenarios, such as losing a high income from your business or incurring a significant debt, where you may need to hold the records longer. The purpose of this document holding duration is to give the IRS sufficient time to make proper assessments. It doesn't mean that you are charged for something that was out of your control.

Final Words

In this article, we shared detailed information on whether you are getting revenue aside from your main job or primarily working as a side income hustler. Initially, it might seem the tax filing is the same, but due to the nature of a side job or gig, you may need to file different Schedule forms.