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Set aside for taxes as you go
Self-employed and gig income usually has no tax withheld.
If you're paid as a contractor or through gig apps, no tax is usually taken out. You may owe income tax and self-employment tax, and may need to pay estimated taxes during the year.
The basics
- Self-employment tax covers Social Security and Medicare, at 15.3% on most net self-employment earnings
- Income tax depends on your total income and deductions
- Estimated taxes are generally due in April, June, September and January
- Keep records of business expenses, like mileage
A simple habit
Move a set percentage of every payment into a separate tax account. Many people use 20% to 30%, but the right amount depends on your situation; IRS.gov has an estimated tax worksheet, and a tax professional can help.
General information, not tax advice. Little by Little Cash isn't paid by any lender, app or gig platform.