What Is a Gig Worker?

Sam walked in the first week of February carrying a manila folder and a paper bag from McDonald’s.

He sat down, put the bag on the edge of the desk, and slid the folder across. “I got some papers from different places,” he said. “I do junk removal. People pay me different ways. I’m not sure how this works.”

The preparer looked at the folder. Inside: a 1099-NEC from a property management company, several handwritten receipts, a printout from Cash App showing payments received, and a crumpled fuel receipt from October.

“Okay,” she said. “Let’s start from the beginning. Tell me about the business.”

That conversation — that exact conversation — is what this whole module is about.

The gig economy has changed what walks through the door of a neighborhood tax office. Rideshare drivers, delivery workers, junk removal operators, lawn care crews, Etsy sellers, Facebook Marketplace flippers, pressure washers, mobile detailers — they all have one thing in common: they worked for themselves, nobody withheld their taxes, and now they need help figuring out what they owe.

In Module 4, every client had a W-2. An employer handled the taxes — Social Security, Medicare, federal income tax — all withheld before the paycheck landed. The client’s job was to hand over the W-2.

Gig workers are completely different. Nobody withholds their taxes. They got paid the full amount every time. That feels great until April, when they find out the IRS wants everything that was never withheld — all at once.

The practical test for the return is simple: W-2 = employee. 1099 (or nothing) = self-employed. The IRS has detailed criteria for employee vs. contractor classification, but you don’t need to memorize them for basic prep work. If a client controlled their own hours, used their own equipment, and set their own prices — they’re self-employed.

Understanding the range of clients you’ll encounter helps you ask better questions. Here are the most common types of self-employed and gig workers in a South Shore or similar suburban market:

Platform-Based Gig Workers. These clients work through apps. Uber and Lyft drivers. DoorDash, GrubHub, and Instacart delivery people. TaskRabbit workers. Rover pet sitters. They receive 1099-K forms from their platforms once earnings exceed thresholds, or 1099-NEC if they earned from a company directly. The platform is not their employer — they are independent contractors for the platform.

Trades and Services. Painters, handymen, electricians, plumbers working for themselves. Lawn care operators. Pressure washers. Pool service. House cleaning. Junk removal. These clients often have a mix of 1099s and cash jobs, plus significant deductible expenses for equipment, fuel, and materials.

Online Sellers. Etsy sellers. eBay resellers. Facebook Marketplace sellers. People who buy items at thrift stores or auctions and resell them. This category is growing every year and many of these clients don’t realize their income is taxable.

Mobile Food Vendors. Food trucks, pop-up vendors, catering. These clients often have significant cash income, cost of goods, and equipment expenses.

A W-2 return is primarily about entering numbers that already exist on a document. A gig worker return requires judgment, investigation, and client education. Here’s what makes them different:

Income is often incomplete or unorganized. Gig workers don’t always receive every form they should. Cash income isn’t documented at all. Your job is to help the client reconstruct a complete picture of what they earned.

Expenses require documentation and verification. Every deductible expense reduces taxable income and self-employment tax. But the client has to be able to substantiate those expenses. Your job is to ask the right questions and make sure the deductions claimed are real and defensible.

Self-employment tax is a shock. Most gig workers have no idea they owe Social Security and Medicare taxes on their net profit. When you show them the number, they’re often stunned. Part of your job is to explain it clearly and without making them feel stupid for not knowing.

Estimated taxes are almost always missing. W-2 workers have taxes withheld all year. Gig workers often don’t pay anything during the year and face the full bill in April. Teaching clients about quarterly estimated payments is part of the service.

One thing that surprises many new preparers: you don’t have to register a business, get a license, or officially declare yourself self-employed to be treated as self-employed for tax purposes. If you perform services and get paid for them — and you’re not an employee — you are self-employed in the eyes of the IRS.

Sam didn’t form an LLC. He doesn’t have a business license. He has a truck, a trailer, and a phone number. But because he’s operating as an independent business and providing services for pay, he files a Schedule C. The same is true for the 17-year-old who mows lawns for neighbors and the 55-year-old who cleans houses for cash.