Self Employed or a Gig Worker? You May Not Know This Important Tax Rule

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Whether you own a business, you are self employed, you are an independent contractor or gig worker, or even if you only accept cash payments and are paid under the table, it is very important to know what you are required to do come tax time. It can be very difficult to locate information for self employed individuals and thoroughly understand what your tax requirements are.

As a disclaimer, I am not a CPA, I am not an accountant, I am not an attorney, and I don’t work for the IRS. If you have any tax questions, they should be brought to a certified tax professional or answered by your CPA.

If you are used to being a non-filer for taxes — meaning you earn below a certain threshold of income in which you do not have to file a tax return — know that the non-filing rule DOES NOT apply to self employment income.

The IRS lists in their publications linked here and here, that one of the special circumstances that does require you to file a tax return — regardless of your income amount — is if you have self employment income. If you have self employment net income in the amount of $400 or more, it is not deemed a hobby. You must report self employment income to the IRS if you make $400 or more within that tax year — even if it’s cash payments, you must report it. You must file your self employment income, even if it doesn’t meet the minimum tax filing threshold.

The IRS States that if your net earnings from self employment are $400 or more, that you are required to file a tax return and claim that self employment income.

Want to learn more about this self employment tax rules? Watch the video here!