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Gig & 1099 work — what to know about taxes
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About
Who this is for
Anyone doing gig, contract, freelance, or "cash" work in the US.
W-2 vs 1099 — the key difference
- W-2 (employee): your employer withholds income + payroll taxes from each paycheck.
- 1099 (contractor): nothing is withheld — you receive the full amount and are responsible for the taxes yourself, including self-employment tax (both the employee + employer halves of Social Security/Medicare) on top of income tax.
What you must do as a 1099 worker
- Set money aside for taxes from each payment — your actual amount depends on income, deductions, filing status, state taxes, and self-employment tax. Use IRS estimated-tax guidance or a CPA instead of treating any percentage as a rule.
- Pay quarterly estimated taxes — the IRS expects payments through the year, not just in April; missing them can mean penalties.
- Track + deduct business expenses — mileage, supplies, phone, etc. (keep receipts/logs); legitimate expenses reduce your taxable income.
- Keep records of all income (including cash) and expenses; you file a Schedule C + Schedule SE with your return.
- You owe tax on cash income too — being paid in cash doesn't make it tax-free.
Frequently asked
No tax was withheld from my gig pay — is that normal?
Yes for 1099 — that's why you set money aside + pay quarterly.
What's self-employment tax?
As a contractor you pay both halves of Social Security/Medicare — budget for it.
Can I deduct my car/phone?
Legitimate business-use portions, yes — keep records; a CPA helps you do it right.
Do I need work authorization for gig work?
Yes — gig/1099 work still requires authorization to work in the US.
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