Tax Preparation for Independent Contractors

As an independent contractor, your relationship with taxes is fundamentally different from a traditional employee's. Nobody withholds money from your paychecks. No employer sends you a W-2 in January. Instead, the responsibility for calculating, setting aside, and remitting taxes falls entirely on you.

This guide covers everything you need to know about tax preparation as a gig worker: which forms to expect, what deductions you can take, how quarterly estimated taxes work, and how tools like Krostio can simplify the process from January through April.

Understanding your tax forms

As a gig worker, the most common tax form you will receive is the 1099-NEC (Nonemployee Compensation). Platforms issue this form if you earned $600 or more during the tax year. You may also receive a 1099-K if you processed more than $20,000 in payments across more than 200 transactions through a third-party payment network.

The key tax form you will file is Schedule C (Profit or Loss from Business), which is attached to your personal Form 1040. Schedule C is where you report your gross income and deduct your business expenses to arrive at your net self-employment income.

Self-employment tax: what it is and how to calculate it

One of the biggest surprises for new gig workers is the self-employment tax. When you are an employee, your employer pays half of your Social Security and Medicare taxes (FICA). As an independent contractor, you pay both halves, totaling 15.3% on your net earnings:

• 12.4% for Social Security (up to the annual wage base)
• 2.9% for Medicare (no income limit)

You calculate self-employment tax on 92.35% of your net self-employment income. So if your Schedule C net income is $50,000, you pay self-employment tax on $46,175.

Common deductions for gig workers

The IRS allows you to deduct ordinary and necessary business expenses on Schedule C. For gig workers, these are the most common deductions:

• Vehicle expenses. You can deduct either the standard mileage rate ($0.67 per mile in 2026) or your actual vehicle expenses (gas, maintenance, insurance, depreciation).
• Phone and internet. If you use your phone for deliveries or ride-hailing, you can deduct a percentage of your monthly bill.
• Equipment and supplies. Dashcams, phone mounts, insulated delivery bags, and other work-related gear are deductible.
• Health insurance premiums. Self-employed individuals can deduct health, dental, and long-term care insurance premiums on Schedule 1.
• Home office. If you use a dedicated space in your home exclusively for business, you can deduct $5 per square foot (up to 300 square feet) using the simplified method.
• Krostio subscription. The Pro plan is a business expense directly related to managing and verifying your income.

Quarterly estimated tax payments

Because no taxes are withheld from your gig paychecks, the IRS requires you to pay estimated taxes quarterly. The due dates are:

• April 15 (for January through March income)
• June 15 (for April and May income)
• September 15 (for June through August income)
• January 15 of the following year (for September through December income)

Each payment should cover both your income tax and self-employment tax for that quarter. The safe harbor rule lets you avoid penalties if you pay at least 100% of last year's total tax liability (110% if your adjusted gross income was over $150,000).

For a deeper dive, see our dedicated guide on quarterly estimated tax payments for gig workers.

How Krostio simplifies tax preparation

Krostio Pro includes features built specifically for tax season. Your earnings dashboard can be filtered by tax year and exported in a Schedule C-aligned format. The built-in write-off tracker lets you log deductible expenses throughout the year, so you do not have to reconstruct them from memory in April.

Krostio also integrates with the most common tax preparation software and your CPA. Instead of manually totaling up your Uber, Lyft, DoorDash, and Upwork earnings, you can export a single report with all income sources, monthly breakdowns, and expense categories.

When to work with a CPA

While many gig workers can handle their own taxes using software like TurboTax Self-Employed or FreeTaxUSA, there are situations where a CPA adds significant value:

• Your net income exceeds $100,000 and you want to optimize your entity structure (S-corp election, LLC)
• You have multiple income streams across different states
• You are audited and need representation before the IRS
• You want to set up a SEP IRA or Solo 401(k) to reduce taxable income while saving for retirement

A good CPA who understands the gig economy will pay for themselves in deductions found and penalties avoided.

Tax preparation checklist

1. Gather all 1099 forms from platforms where you earned $600+
2. Export your Krostio earnings summary for the tax year
3. Compile business expense receipts and categorize them
4. Calculate vehicle mileage (use a mileage tracking app)
5. Review retirement contributions (SEP IRA, Solo 401(k)) for potential deductions
6. File Schedule C along with your Form 1040 by the April deadline

Tax preparation as an independent contractor takes more work than a standard W-2 filing, but it also gives you more control over your tax liability through deductions and planning. With the right tools and habits, you can turn tax season from a source of stress into a straightforward annual process.