Do gig workers need to file Form 1099-NEC for income reporting?

by | May 2, 2025 | Income Reporting, Individual Taxes

Here’s what HIVE AI had to say about “Do gig workers need to file Form 1099-NEC for income reporting?”:

Reporting Requirements for Gig Workers and Form 1099-NEC

No, gig workers themselves do not need to file Form 1099-NEC for income reporting. Instead, the companies or platforms that pay gig workers are typically responsible for issuing Form 1099-NEC (or in some cases Form 1099-K) to report payments made to independent contractors, including gig workers.

Who Issues Form 1099-NEC

Generally, a worker who receives a Form 1099-MISC or 1099-NEC for services provided as an independent contractor must report the income on Schedule C and pay self-employment tax on the net profit, using Schedule SE. IRS IRM 21.6.4 Tax Computation / Accounting Period Changes The form is issued by the payer (the company or platform), not by the worker.

If payment for services you provided is listed on Form 1099-NEC, Nonemployee Compensation, the payer is treating you as a self-employed worker, also referred to as an independent contractor. You don’t necessarily have to have a business for payments for your services to be reported on Form 1099-NEC. You may simply perform services as a nonemployee. The payer has determined that an employer-employee relationship doesn’t exist in your case. IRS.gov FAQ

Gig Economy Income Reporting Requirements

If you use one of the many online platforms available to provide goods and services, you may be involved in what is known as the sharing (or gig) economy. If you receive income from a sharing (or gig) economy activity, it’s generally taxable even if you don’t receive a Form 1099-NEC, Nonemployee Compensation; Form 1099-MISC, Miscellaneous Information; Form W-2, Wage and Tax Statement; or some other income statement. IRS – Instruction 1040-NR: Instructions for Form 1040-NR, U.S. Nonresident Alien Income Tax Return

Taxpayers are required to report all income earned from the gig economy on a tax return, even if the income is:

  • From temporary, part-time or side work.
  • Paid through digital assets like cryptocurrency, as well as cash, goods or property.
  • Not reported on an information return form like a Form 1099-K, 1099-MISC, W-2 or other income statement. IRS Newsroom – IR-2024-63

When Companies Must Issue Form 1099-NEC

Companies that pay gig workers must issue Form 1099-NEC when payments to an individual exceed $600 in a calendar year. However, it’s important to note that:

Certain income is not reported via Form 1099 unless a specific dollar amount or number of transactions are met. IRS IRM 5.8.5 Financial Analysis

Generally, the time for furnishing Form 1099-MISC or Form 1099-NEC is set forth in IRC 6041(d), “The written statement required under the preceding sentence shall be furnished to the person on or before January 31 of the year following the calendar year for which the return under subsection (a) was required to be made.” IRS IRM 4.23.9 Employment Tax Penalty, Fraud, and Identity Theft Procedures

Forms W–2 and W–3 and any returns or statements required by the Secretary to report nonemployee compensation shall be filed on or before January 31 of the year following the calendar year to which such returns relate. IRC § 6071(c)

How Gig Workers Report Their Income

As a gig worker, you need to report your income as follows:

If you weren’t an employee of the payer, where you report the income depends on whether your activity is a trade or business. You’re in a self-employed trade or business if your primary purpose is to make a profit and your activity is regular and continuous. If you’re in a self-employed trade or business, you must include payments for your services on Schedule C (Form 1040), Profit or Loss From Business (Sole Proprietorship). IRS.gov FAQ

If you’re self-employed, you’ll also need to complete Schedule SE (Form 1040), Self-Employment Tax and pay self-employment tax on your net earnings from self-employment of $400 or more. There’s no withholding of tax from self-employment income. As a self-employed individual, you may need to make estimated tax payments during the year to cover your tax liabilities. Refer to Form 1040-ES, Estimated Tax for Individuals for more details on who must pay estimated tax. IRS.gov FAQ

Importance of Proper Income Reporting

Even if you don’t receive a Form 1099-NEC or other tax form, you are still legally obligated to report all income earned from gig work. The IRS has specific guidance for gig economy workers:

The OE/OS must question the taxpayer when the potential exists they receive income from the gig economy (also called sharing or access economy in which on demand work/services are provided). In these instances, question the taxpayer about additional income sources. IRS IRM 5.8.5 Financial Analysis

This indicates that the IRS is aware that gig economy income may not always be properly reported and is taking steps to ensure compliance.

Record-Keeping for Gig Workers

Proper record-keeping is essential for gig workers, even if they don’t receive a Form 1099-NEC:

Petitioner credibly testified that he paid the amounts listed on each Form 1099-MISC issued to each contract laborer. Each year Petitioner kept track of which jobs each contract laborer worked in a spiral notebook. Petitioner used this spiral notebook to determine the amount paid to each contract laborer. Petitioner also verified the amounts shown on each Form 1099-MISC with the contract laborer to make sure they were in agreement on what the contract laborer was paid. Dawson U.S. Tax Court Opinions: Edoin Ochoa

This example from a Tax Court case demonstrates the importance of maintaining detailed records of income and expenses, which can be crucial if your tax return is ever questioned.

Conclusion

As a gig worker, you do not need to file Form 1099-NEC yourself. Instead, the companies or platforms that pay you should issue this form if they pay you $600 or more in a calendar year. However, regardless of whether you receive a Form 1099-NEC or any other tax form, you are still required to report all income earned from gig work on your tax return, typically on Schedule C, and pay self-employment tax on your net earnings if they exceed $400.

Remember that proper record-keeping is essential, as you are responsible for reporting all income earned, even if it’s not reported on an information return. If you have questions about your specific situation, it’s advisable to consult with a tax professional.

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