[{"data":1,"prerenderedAt":-1},["ShallowReactive",2],{"doc-seo-304822-105":3,"detail-sidebar-cat-1-en-105":80,"doc-detail-304822-en":126},{"code":4,"msg":5,"data":6},0,"ok",{"site_id":7,"language":8,"slug":9,"title":10,"keywords":11,"description":12,"schema_data":13,"social_meta":73,"head_meta":75,"extra_data":77,"updated_unix":79},105,"en","tax-treatment-of-gig-economy-workers-august-11-2021","Tax Treatment of Gig Economy Workers - August 11, 2021","","August 11, 2021 brief explains how gig economy workers are taxed and summarizes relevant legislative changes. It defines the gig economy and the roles of the worker, digital platform, and consumer, including how platforms can set rates and handle payments. It outlines gig workers’ federal income tax obligations, eligible deductions (such as home-office and business costs), the Qualified Business Income deduction under TCJA, and self-employment taxes, including thresholds and Social Security/Medicare treatment. 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Platforms like Uber, Airbnb, DoorDash, and TaskRabbit match workers with consumers and often process payments and set rates.","Answer",{"name":65,"@type":60,"acceptedAnswer":66},"What federal taxes do gig economy workers generally owe?",{"text":67,"@type":63},"Gig economy workers generally owe federal income tax and social insurance taxes. Because they are treated like independent contractors, the tax code treats them similarly to sole proprietors for federal tax purposes.",{"name":69,"@type":60,"acceptedAnswer":70},"What are the Qualified Business Income (QBI) and self-employment tax rules mentioned?",{"text":71,"@type":63},"Under TCJA, many gig economy workers may deduct 20% of net business income through the QBI deduction. Gig workers generally owe self-employment taxes on net earnings of $400 or more, with a typical rate of 15.3% on net earnings, and they may deduct half as an above-the-line deduction.","https://schema.org",{"og:url":32,"og:type":74,"og:title":10,"og:site_name":45,"og:description":12},"article",{"robots":76,"canonical":32},"index,follow",{"doc_id":78,"site_id":7},304822,1790542679,{"code":4,"msg":81,"data":82},"success",[83,88,93,98,103,108,113,117,122],{"id":84,"doc_module":22,"doc_module_name":25,"category_name":85,"show_sort_weight":86,"slug":87},11,"Presentations",90,"presentations",{"id":89,"doc_module":22,"doc_module_name":25,"category_name":90,"show_sort_weight":91,"slug":92},12,"Resumes",80,"resumes",{"id":94,"doc_module":22,"doc_module_name":25,"category_name":95,"show_sort_weight":96,"slug":97},14,"Invoices",70,"invoices",{"id":99,"doc_module":22,"doc_module_name":25,"category_name":100,"show_sort_weight":101,"slug":102},15,"Posters",60,"posters",{"id":104,"doc_module":22,"doc_module_name":25,"category_name":105,"show_sort_weight":106,"slug":107},16,"Social Media",50,"social-media",{"id":109,"doc_module":22,"doc_module_name":25,"category_name":110,"show_sort_weight":111,"slug":112},17,"Forms",40,"forms",{"id":114,"doc_module":22,"doc_module_name":25,"category_name":29,"show_sort_weight":115,"slug":116},18,30,"letters",{"id":118,"doc_module":22,"doc_module_name":25,"category_name":119,"show_sort_weight":120,"slug":121},21,"Paper Templates",5,"papers-templates",{"id":123,"doc_module":22,"doc_module_name":25,"category_name":124,"show_sort_weight":4,"slug":125},158,"General","general-158",{"code":4,"msg":81,"data":127},{"doc_id":78,"user_id":128,"nickname":42,"user_avatar":129,"doc_module":22,"category_id":114,"category_name":29,"doc_title":10,"doc_description":12,"doc_content":130,"file_id":131,"file_url":132,"file_type":133,"file_size":134,"view_count":30,"is_deleted":4,"is_public":22,"is_downloadable":22,"audit_status":22,"page_count":30,"language":135,"language_code":8,"site_id":7,"html_lang":8,"table_of_contents":136,"faqs":137,"seo_title":138,"seo_description":12,"update_tm":139,"read_time":22},2336474466412,"https://ap-avatar.wpscdn.com/davatar_155a257f0dc6eb9ab79c44ca47cae57d","August 11, 2021  \nTax Treatment of Gig Economy Workers  \nThe gig economy (or sharing economy)is a form of work relationship that has become popular in recent years. Gig economy workers earn income by providing on-demand work, with “gigs” often facilitated through digital platforms. This In Focus providesan overview of how gig economy workers are taxed and reviews recent legislative changes.  \nWhat Is the Gig Economy?  \nThere are three parties to a gig economy transaction: the worker, a digital platform, and a consumer. Digital platforms, such as Uber, Airbnb, DoorDash, and TaskRabbit, match workers with consumers and often process payments. Many platforms also set rates for work. Because the digital platforms act as intermediaries, workers and consumers often have less interaction with eachother (in terms of advertising, contracting, payment processing, etc.) than in other freelance business relationships.  \nParticipation in the gig economy is widespread. Although the major digital platforms are the best known, many gigs predate the internet and do not use digital platforms. For more on the gig economy and what it means for workers, see CRS Report R44365, What Does the Gig Economy Mean for Workers?  \nThe tax treatment of gig economy workers is very similar to that of other self-employed workers. The gig economy is sometimes called the “1099 economy,” named after the series ofIRS forms that income is reported on. The particular Form1099 that gig economy workers receive depends on the work they do and the platform’s legal structure. In many cases, a gig economy worker (and the IRS) will receive a 1099-NEC (a new form that replaced some functions of the 1099-MISC)or 1099-K froma platformthey performservices for. Gig economy workers are independent contractors—broadly, workers who provide a service but are not employees of the organization. (In contrast, traditional employees are sometimes referred to as“W-2 employees” reflecting the information return on which their employee compensation is reported.)  \nWhat Taxes Are Gig Economy Workers Subject To?  \nGig economy workers are generally subject to the same taxes as other self-employed individuals. They calculate their liabilities and pay any unpaid taxes as part of their individual income taxreturns (i.e., IRS Form 1040) . Gig economy workers owe federal income taxand social insurance taxes on income they receive, comparable to the taxes W-2 employees owe. (For self-employed workers, social insurance taxes are often referred to as “selfemployment” taxes , discussed below.) Since gig economy workers are often paid as independent contractors, the tax  \ncode treats gig economy workers like sole proprietors, the single employee of an unincorporated small business.  \nIncome Taxes  \nGig economy workers have the same federal income tax obligations as traditional employees, and are subject to the same tax rates. Net income from gig economy work (revenues less deductions) is subject to federal income tax, even if the platformdoes not report it to the IRS.  \nIncome tax deductions. Gig economy workers are eligible for the same deductions available to other small business owners. This allows gig economy workers to deduct certain operating costs to determine net business income. Some deductible expenses include business-related mileage in a personal vehicle, equipment and materials needed for work, and the use of a home office. Gig economy workers may also deduct half of self-employment taxes paid as an abovethe-line deduction on their individual income taxreturns. These deductions are available to gig economy workers whether they itemize their deductions or not.  \nMany of these deductions are not currently available to traditional employees. The 2017 tax revision (commonly referred to as the “TaxCuts and Jobs Act” or TCJA; P.L. 115-97) temporarily repealed the deductibility ofunreimbursed expenses incurred by an employee for tax years 2018 to 2025 (through the limit on miscellaneous itemized d","cbCaieKzWv7D4ASV","https://ap.wps.com/l/cbCaieKzWv7D4ASV","pdf",480418,"English","# Tax Treatment of Gig Economy Workers\n## What Is the Gig Economy?\n## What Taxes Are Gig Economy Workers Subject To?\n### Income Taxes\n### Self-Employment Taxes\n## What Are the Platforms’ Reporting Requirements?","[{\"question\":\"How is the gig economy defined and who are the main parties involved?\",\"answer\":\"A gig economy transaction involves the worker, a digital platform, and a consumer. Platforms like Uber, Airbnb, DoorDash, and TaskRabbit match workers with consumers and often process payments and set rates.\"},{\"question\":\"What federal taxes do gig economy workers generally owe?\",\"answer\":\"Gig economy workers generally owe federal income tax and social insurance taxes. Because they are treated like independent contractors, the tax code treats them similarly to sole proprietors for federal tax purposes.\"},{\"question\":\"What are the Qualified Business Income (QBI) and self-employment tax rules mentioned?\",\"answer\":\"Under TCJA, many gig economy workers may deduct 20% of net business income through the QBI deduction. Gig workers generally owe self-employment taxes on net earnings of $400 or more, with a typical rate of 15.3% on net earnings, and they may deduct half as an above-the-line deduction.\"}]","Tax Treatment of Gig Economy Workers - August 11, 2021 | PDF",1789817976]