Lesson 2.5: Gig Work, Small Business & a Changing Labor Market
The Go Further companion to Lesson 2.5 in Money Decisions.
IRS Gig Economy Tax Center
The IRS's plain-language page for gig workers: what income you have to report, which forms it arrives on (1099s, not a W-2), and how quarterly estimated payments work when nobody withholds for you.
Key ideas from the lesson
- Gig work trades a boss for an app: you pick your hours, but nobody promises a paycheck. Budget on a slow week, never your best one.
- Gross isn't what you keep. Fuel, the platform's cut, upkeep and supplies come out first — only the profit is yours. Count your waiting time too: the app doesn't pay you to sit in a parking lot, but you're still there.
- The app isn't your employer: nobody withholds tax, pays you for a sick day, or adds to a retirement plan. Self-employment tax is 15.3% on 92.35% of profit — about 14¢ of every profit dollar — paid in quarterly estimated payments.
- The safe habit: move a set share of every week's profit into a tax account before you spend anything.
- The market moves under all of this — employer demand, technology, inflation and recessions all change what the same work pays and how many hours it offers.
Why this helps
Lesson 2.5's gig worker discovers in April what the IRS knew all along: no employer means no withholding, and the tax bill arrives anyway. The IRS's own gig-economy page is the official version of the lesson's rules — what counts as income, and how the quarterly payments that replace withholding actually work.
Try this
In the Tax Center, find how the IRS says gig income is reported to you (which form, instead of a W-2) and when estimated payments are due. Then take a hypothetical $400 profit week from the lesson and compute the tax set-aside using the lesson's numbers.
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