IRS Clarifies Tax Obligations for Self-Employed Individuals and Gig Economy Workers
The Internal Revenue Service (IRS) has provided clarifications regarding tax obligations for self-employed individuals and those participating in the gig economy. Generally, a federal tax return is required if net earnings from self-employment reach $400 or more, though other filing requirements may apply even below this threshold. The IRS emphasizes that income from gig work must be reported, regardless of whether a 1099 form was received or if the payment was in cash. Sole proprietors typically report business income and expenses on Schedule C, and Schedule SE is used to calculate self-employment tax, which contributes to Social Security and Medicare. Business deductions must be ordinary and necessary for the work, and personal spending is not deductible. The IRS advises maintaining thorough records of income, expenses, and other relevant financial activities.
