Common Forms and Rules That Gig Drivers Need to Know for Tax Season
Tax Day 2023 is closing in, and the burden for gig workers is a little heavier because you’re considered independent contractors — not employees — of the popular app-based companies you work for.
After years of filing extensions because of the pandemic, last year marked the return to a more familiar April deadline. Similarly, this year’s deadline to file your federal taxes is April 18.
While seasoned freelancers and gig workers likely know the drill when it comes to the process of filing your own taxes, it can be a daunting task for anyone new to the industry. The key thing to remember is that you’re responsible for reporting your gig work income for every client or company that paid you more than $600 in 2022.
One reason for all the confusion? Your tax documents may not have arrived via snail mail (the way they typically would with a full-time employer) — especially as more and more companies start offering digital copies of tax filing documents.
Regardless, you should have received everything you need (on paper, digitally, or both) from any companies you contracted with by Jan. 31. In any year, if you haven’t gotten anything by late February, reach out ASAP.
Here’s a rundown of the tax forms you’ll need to use as a gig worker – plus a look at the tax policies of five of the most popular gig app companies: Instacart, DoorDash, Grubhub, Lyft and Uber.
Common Tax Forms for Gig Workers
In the eyes of the IRS, you’re a self-employed worker. That means it’s up to you to compile the appropriate tax forms and accurately report your income.
Common Income Forms Sent to You
Companies that paid you more than $600 in a calendar year should send you a 1099 (either digitally or in the mail), as required by law. If you work across multiple apps, it’s possible you will receive a 1099 from each company. And depending on what companies you work for, you may receive up to three different types of 1099 per company.
The 1099-NEC was introduced in 2020 and is the main tax form that’s now used to report nonemployee compensation of $600 or more. Many companies previously used the 1099 MISC (Box 7) to report this income, and if you’re an independent contractor who used to receive that form, you’ll likely now receive this one instead. On this new form, you’ll use the amount in Box 1 to report your self-employment income.
The 1099-K form is another common form sent to gig workers. Previously, workers had to meet certain thresholds to receive this form (ie. offer a certain number of rides via Lyft or Uber or earn a certain amount in a calendar year). Beginning in 2022, anyone receiving payments exceeding $600 via a third party network or debit/credit card transactions will get this form, regardless of the number of transactions they completed.
NOTE: On December 23, 2022 the IRS announced it would treat the 2022 tax year as a transition year for this new policy. Translation? You may or may not get this form from any company you worked for depending on how much you earned and whether or not they followed the initially proposed 2022 guidelines.
If you own a business that accepts credit or debit card payments, drive for a rideshare company, or sell stuff on various online platforms— you may receive this form. Self-employed workers should use this form (along with the NEC) to report gross income earnings for the year. Pay special attention to Box 1a (your net income) as well as Boxes 5a-5l (your net income month-by-month) to understand how much money you received via third party networks.
The 1099-MISC, short for miscellaneous income, has undergone a lot of changes over the past years in order to accommodate the creation of the new 1099 NEC tax form. Like we mentioned up top, this form used to be the number one tax form for gig workers and independent contractors. But in 2023? Not so much.
While you may still receive this form as a gig worker, it won’t necessarily be because of your job. Those receiving the 1099-MISC nowadays are often getting it for reasons like collecting at least $600 or more in rent, medical payments, or prizes and awards. If you do happen to get one of these forms, just remember that the amounts listed on it will need to be reported as income.
Tax Return Forms You Send to the IRS
After you’ve tracked down all your 1099s and tallied up your net income, your next step is to get that number as low as possible by subtracting any and all applicable business expenses and deductions.
As a gig worker, you may need to file the following tax forms with the IRS:
- Form 1040: This is now the main form used by all U.S. taxpayers to file an annual income tax return. (Forms 1040S and 1040EZ are no longer available.)
- Schedule C: is a sub-form of the 1040 used to tally up your profit and loss as an independent contractor. Line No. 1 is where you report gross income from all 1099s or from the income summary provided in your gig app. The subsequent boxes are examples of business expenses you may use to lower your taxable income. Line No. 31 is your net profit, a number you’ll need for the Schedule SE.
- Schedule SE: This is another 1040 sub-form for self-employed (gig) workers. Use it to calculate your self-employment tax.
- Schedule 2: is an “additional tax form,” i.e. where you provide the amount you owe in self-employment taxes from the SE form above. Put that figure on line No. 4 and the grand total on line No. 21.
- Form 1040-ES: Use this form, instead of the standard 1040 if you need to file quarterly taxes.
Tax Policies and Resources of 5 Popular Apps
What forms you receive and what tax service you choose to file with depends on the company you’re working for. Each company has slightly different tax policies and may offer discounts for different tax-filing software services. Here’s how they stack up.
DoorDash
DoorDash partners with Stripe. According to the company, you have received a 1099-NEC via Stripe e-delivery by December 31, 2022. The company no longer sends contractors details on their mileage, but instead recommends signing up with a mileage tracking app like Everlance to track your miles throughout the tax year and see if you qualify for any exemptions. Review DoorDash’s tax FAQ for more information. If you haven’t received your 1099-NEC or your mileage information, contact DoorDash customer support.
Primary tax form: 1099-NEC.
Who: Gig workers who earned more than $600 the previous calendar year.
How: Electronic form (unless you opted for paper delivery instead).
Instacart
Much like DoorDash, Instacart has partnered with Stripe to provide tax forms to its contractors. If you earned $600 or more with the company in 2022, you should expect to receive an email containing tax information from Stripe or Instacart by early January 2023—at which point you will be able to download your forms from Stripe Express. If you have any issues receiving your forms, or have questions, you can reach out to the company by logging into the Shopper Helping Center.
Primary tax form: 1099-NEC.
Who: Instacart shoppers who earned more than $600 the previous calendar year.
How: Electronic form.
Grubhub
If you’re a Grubhub driver who earned more than $600 in 2022, and are enrolled in electronic communications, then you should have received your 1099-NEC via email by the end of January 2023. If you opted out of electronic tax communications, then you likely received a mailed copy of the form around the same time.
Visit Grubhub’s taxes FAQ for more information. If you haven’t received your form by Feb. 15, Grubhub recommends contacting the driver care team at [email protected] or at 866-834-3963.
Primary tax form: 1099-NEC.
Who: Grubhub drivers who earned more than $600 the previous calendar year.
How: Electronic and paper form.
Lyft
According to Lyft’s tax site for drivers, the company partners with TurboTax to provide discounted self-employed tax-filing services. All Lyft drivers receive 25% off TurboTax Self-Employed and TurboTax Self-Employed Live Federal filing.
Platinum drivers receive 50% off. To access your tax documents online (which may include the 1099-K as well as the 1099-NET), log in to your driver dashboard and click the “Tax Information” tab. There, you’ll be able to view your 1099-NEC, 1099-K and an unofficial tax summary document compiled by Lyft. The tax summary displays your net earnings and is especially useful if you don’t meet the earning threshold for either 1099 form. All tax documents will be available in your dashboard by January 31, 2022.
Primary tax forms: 1099-K and 1099-NET.
Who: Lyft drivers who earned more than $600 the previous calendar year.
How: Electronic and paper form.
Uber
Like Lyft, Uber partners with TurboTax to provide free self-employed tax-filing services – plus a 50% discount for live chats with TurboTax’s CPAs.
You can view your tax summary on or after Jan. 31 (which may include the 1099-K as well as the 1099-NET), via the tax information tab of your partner dashboard. You should have access to Uber’s tax summary even if you haven’t met the income thresholds for either 1099 forms. For more information on tax documents provided by Uber, visit their Tax Support page.
Primary tax forms: 1099-NET and 1099-K.
Who: Uber drivers who earned more than $600 the previous calendar year.
How: Electronic and paper form.
Contributor Larissa Runkle specializes in finance, real estate and lifestyle topics. She is a regular contributor to The Penny Hoarder. Contributor Matt Mastasci contributed to this report.
