Whether it’s a full-time job or just a side hustle, taxpayers must report gig economy earnings on their tax return. 1099-K reporting requirement threshold has been reduced from $20,000 to $600 from 2022.
Gig work is taxable:
• Earnings from gig economy work is taxable, regardless of whether an individual receives information returns. The reporting requirement for issuance of Form 1099-K changed for payments received in 2022 to totals exceeding $600, regardless of the total number of transactions. This means some gig workers will receive an information return.
• Not reporting gig earnings may result in Notice CP2000 from the IRS assessing additional tax on the total amount reported ignoring any possible expense deductions.
• Gig workers may also be required to make quarterly estimated income tax payments and pay their share of Social Security and Medicare taxes.
• Gig workers may be able to deduct business expenses. It is important for taxpayers to keep records of their business expenses, which could include supplies, vehicle’s business mileage, business meals, cell phone costs, etc.