The short answer: money you earn driving, delivering, freelancing or selling things you made or bought to resell is taxable income, whether or not you get a form for it. You report it on Schedule C, subtract your business expenses, and pay income tax plus self-employment tax on the profit. For 2026, fewer people will get 1099 forms, because the reporting thresholds went up. That doesn't change what you owe.
This guide covers the forms, the taxes, the deductions that lower them, and how to avoid a penalty for not paying during the year.
Are you self-employed?
If you work for yourself rather than as someone's employee, you're self-employed for tax purposes. That includes:
- Rideshare and delivery drivers on app platforms
- Freelancers: writers, designers, developers, photographers, tutors
- Contractors and consultants paid on a 1099
- People who sell handmade goods, or buy items to resell
- Pet sitters, cleaners, handypeople and others paid directly by customers
You can be an employee at one job and self-employed on the side. Your W-2 job and your side work go on the same return.
The forms you might get for 2026
| Form | Who sends it | When you get one for 2026 |
|---|---|---|
| 1099-NEC | A business that paid you for your work | If it paid you $2,000 or more (up from $600) |
| 1099-MISC | A business that paid you rents, prizes or certain other income | Generally $2,000 or more for most boxes |
| 1099-K | A payment app or online marketplace | If you received more than $20,000 across more than 200 transactions |
| None | Customers who paid you directly, or payers under the thresholds | Common. The income still counts. |
The 1099-K threshold went back to $20,000 and 200 transactions under the 2025 tax law, and the 1099-NEC threshold rose to $2,000 starting with 2026 payments. Both changes mean fewer forms. Neither changes what's taxable.
Keep your own records. Most platforms provide an annual earnings summary in the app, even if they don't send a 1099. Download it.
How gig income is taxed
Step 1: Figure your profit on Schedule C
Schedule C starts with your gross income, the total you were paid, and subtracts your business expenses. What's left is your net profit.
Step 2: Self-employment tax
When you're an employee, your employer withholds Social Security and Medicare tax from your pay and pays a matching share. When you're self-employed, you pay both shares yourself through self-employment tax. It's 15.3% of 92.35% of your net profit, up to the annual Social Security wage limit, and you owe it if your net profit is $400 or more.
You get to deduct half of your self-employment tax when figuring your income tax.
Step 3: Income tax
Your profit is added to your other income, like W-2 wages, and taxed at your regular rates.
Step 4: The qualified business income deduction
Many self-employed people can also deduct up to 20% of their qualified business income. It's taken after adjusted gross income, so it lowers income tax but not self-employment tax.
Expenses you can deduct
You can deduct costs that are ordinary and necessary for your work. For gig workers, the big ones are:
Car expenses
If you drive for work, you can deduct either:
- The standard mileage rate for every business mile, which the IRS sets each year, or
- Your actual costs: the business share of gas, repairs, insurance, depreciation and similar costs.
Commuting from home to a regular workplace doesn't count. For app drivers, miles driven while working, such as to a pickup and during a delivery, generally do. Keep a mileage log. Many driving apps track miles while you're online, and there are free mileage-tracking apps too.
Platform fees and commissions
Fees an app or marketplace takes from your earnings are deductible. If your 1099-K shows your gross receipts before fees, deduct the fees as an expense.
Phone and internet
The business share of your phone and internet bill. If you use your phone half the time for work, you can deduct half.
Supplies, equipment and software
Insulated delivery bags, a phone mount, a laptop for freelance work, design software, and similar items.
Home office
If you use part of your home regularly and only for your business, you can deduct a home office. The simplified method lets you deduct a set amount per square foot, up to 300 square feet. A kitchen table you also eat at doesn't qualify.
Health insurance and retirement
If you pay for your own health insurance and aren't eligible for an employer's plan, you may be able to deduct the premiums. Contributions to a SEP-IRA or solo 401(k) are deductible too.
A worked example
Alex drove for two delivery apps in 2026 and also works part time at a store.
| Amount | |
|---|---|
| Gross delivery earnings | $24,000 |
| Platform fees | −$1,200 |
| Business miles (using the IRS standard rate) | −$6,500 (example) |
| Phone, 60% business use | −$540 |
| Insulated bags and phone mount | −$85 |
| Net profit (Schedule C) | $15,675 |
Self-employment tax: $15,675 × 92.35% × 15.3% = about $2,215. Alex deducts half of that, about $1,107, from income. The rest of the profit is added to Alex's store wages and taxed at regular rates, after the qualified business income deduction.
Without tracking miles and fees, Alex's profit would have been $24,000, and self-employment tax alone would have been about $3,390.
Selling your own stuff online
If you sold personal items, like used clothes, furniture or electronics, for less than you paid, that's generally not taxable. You might still get a 1099-K if your sales were large enough. In that case, you report the sale and show that there was no gain.
If you sold something for more than you paid, like a collectible, the gain is taxable. And if you buy things specifically to resell, that's a business, and it goes on Schedule C.
Paying tax during the year
Nobody withholds tax from gig pay. If you expect to owe $1,000 or more when you file, the IRS expects you to pay during the year through quarterly estimated payments. For 2026 income, the due dates are:
| Payment | Due |
|---|---|
| 1st | April 15, 2026 |
| 2nd | June 15, 2026 |
| 3rd | September 15, 2026 |
| 4th | January 15, 2027 |
If you also have a W-2 job, another option is to raise the withholding on your W-4 at that job to cover your gig taxes.
If you missed payments in 2026, you may owe a small penalty when you file. It's calculated like interest, so paying sooner keeps it smaller.
Records to keep
- Each platform's annual earnings summary and any 1099s
- A mileage log
- Receipts for supplies and equipment
- Phone and internet bills
- Bank statements showing deposits from customers
Keep them for at least three years after you file.
Frequently asked questions
I made less than $2,000 from a client. Do I still report it? Yes. The threshold is only for when the client has to send a form. All your self-employment income is reportable.
I made under $400 in profit. Do I owe anything? You don't owe self-employment tax if your net profit is under $400, but the profit is still part of your income for income tax.
My 1099-K includes money that wasn't income, like friends paying me back. What do I do? Report the 1099-K amount and then subtract the part that wasn't income, with a short explanation. Personal reimbursements aren't taxable.
Can I deduct my car if I also use it personally? Yes, but only the business share. A mileage log is how you show which miles were for work.
Does Navo handle self-employment income? Yes. Navo handles freelance, contract and app-based work on Schedule C, including business expenses, more than one business, the home office deduction, depreciation of equipment and vehicles, inventory, and self-employed health insurance and retirement contributions. See what Navo covers.
Related guides
- What's new for your 2026 taxes
- Car loan interest deduction
- No tax on tips (self-employed tipped workers can qualify)
This post is general information, not tax advice for your situation. Sources: Instructions for Forms 1099-MISC and 1099-NEC (Rev. December 2026); IRS, Form 1099-K threshold FAQs; IRS, Self-employment tax.