The first year of gig work often ends the same way. The money felt good all year, and then April shows up with a tax bill nobody saw coming. A lot of the tax debt calls we get start with some version of that story.
It isn't carelessness. It's how the system works when nobody withholds for you. Here's what drives the bill, and a simple setup that keeps it from turning into IRS debt.
Why the bill is bigger than people expect
When you're an employee, taxes come out of every check and your employer pays half of Social Security and Medicare. When you work for yourself, none of that happens automatically.
On top of regular income tax, you owe self-employment tax. The IRS sets that rate at 15.3%, made up of 12.4% for Social Security and 2.9% for Medicare, and you have to file Schedule SE once your net self-employment earnings reach $400. A lot of new gig workers budget for income tax and forget this piece entirely.
Not getting a form doesn't mean you don't owe
Under the One, Big, Beautiful Bill, the reporting threshold for Form 1099-K went back to more than $20,000 in payments and more than 200 transactions in a year. That means many part-time gig workers won't get a 1099-K from the platform at all.
The IRS is clear that this doesn't change what you owe. Taxpayers have to report all income, whether or not they receive a 1099-K or any other information return. No form is not the same as no tax.
Estimated taxes are the fix
The IRS says you generally need to make estimated tax payments if you expect to owe $1,000 or more when you file. Payments are due four times a year: April 15, June 15, September 15 and January 15 of the following year.
To avoid an underpayment penalty, you generally need to pay at least 90% of this year's tax or 100% of last year's, whichever is smaller. Higher earners have a stricter version of the prior-year rule, so check IRS Publication 505 if your income is up.
The setup I'd recommend
Open a separate account just for taxes. Every time a platform pays you, move a set percentage over before you spend anything. My rule of thumb is 25% to 30% of each payout, though the right number depends on your bracket, your state and your expenses.
Pay the quarterly estimates from that account. Put the four dates in your calendar now. Paying from money you already set aside feels very different from finding it in April.
Track your expenses as you go. Mileage, phone, supplies and platform fees can reduce your net earnings, and that lowers both income tax and self-employment tax. Reconstructing a year of mileage in March almost never goes well.
If you already owe the IRS
File on time even if you can't pay the full amount. The penalty for not filing is usually much larger than the penalty for not paying, so filing late makes the problem worse.
Then look at payment options. The IRS offers a short-term plan of up to 180 days if you owe less than $100,000 in combined tax, penalties and interest, and a long-term monthly plan if you owe $50,000 or less and have filed all required returns.
An Offer in Compromise, where the IRS accepts less than the full balance, exists too, but it's not a shortcut. In fiscal 2025 the IRS accepted 5,464 of the 38,797 offers taxpayers proposed, about 1 in 7, according to the IRS Data Book. Most people are better served by a payment plan they can keep.
Tax outcomes depend on your full financial picture, so talk to a licensed tax professional before you choose a path.
The short version
Gig income is real income, and the IRS expects a cut of it every quarter, not once a year. Set aside a percentage of every payout, pay the estimates on schedule, and a surprise tax bill turns into a routine one.