How Much Self-Employment Tax Should You Pay if You’re a Gig Worker?

If you have a side-hustle, here’s how to make sure you pay all the taxes you owe. 

Whether it’s dog walking, Door Dashing, consulting, selling cosmetics, or babysitting, nearly 45% of working Americans report having a side-hustle. And among Millennials, that number rises to 50%.

From a financial planning perspective, we view working on the side as a great way to close the gap on savings goals and help get you on a path to reducing debt or greater financial freedom.

However, even work on the side has tax implications, and not filing or filing incorrectly can cost you money in fines or even trigger an audit.

How to file:

Be sure to file a 1099 NEC (non-employee compensation) form for each company you gig for, such as Uber Eats, Door Dash, etc. Here are the three main tax obligations you’ll need to account for:

Federal taxes (which cover Social Security and Medicare) have to be pre-paid and are due quarterly, in April, June, September, and January. These can be submitted online here.  If you don’t file these, there could be an underpayment penalty.

Self-employment tax: 1040 ES helps you calculate self-employment tax. This tax is not quarterly, but rather due with your personal income tax on April 15 of every year.

State-specific tax. You’ll need to find out what the tax is in your state, and most states have their own self-employment tax calculators.

How to pay:

You can easily make all three payments online from a debit or credit card, or from an online bank account. Tip: Be sure to save the confirmation of payment and keep it for your records, as sometimes there are instances of payment when the IRS has no record.


Business expenses can be deducted, lessening your overall tax bill—just make sure you only record and deduct expenses for actual business use. Here are a few ideas:

Cell phone. Since personal cell phones are used by gig workers for both personal reasons AND their side hustle, you’ll need to create a way to track hours of use, like a monthly log.

Mileage. The current compensation rate is 56 per mile, and there are apps that will help you track mileage such as this one.

Health insurance. If you are self-employed, you can potentially deduct some of your insurance costs.

Self-employment tax. Yes, you can actually deduct 50% of your self-employment tax…on your taxes.

Home office. This one can be tricky, as the IRS has strict requirements and this can sometimes trigger an audit. Be sure to get advice from a tax professional.

Also, internet, publications/subscriptions related directly to the business, education related to maintaining or improving skills, business insurance, start-up costs, advertising

Insider tip:

Some of the biggest self-employment tax mistakes we see at Aspen Wealth Strategies include:

  1. Missing deductions/not being aware of them
  2. Poor tracking/logging including write-offs for personal use
  3. Not filing quarterly federal (and maybe state) taxes

Contact one of our wealth management specialists to make sure you don’t have any tax surprises.

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