Educational only, not tax advice. GigMoney Playbook explains general IRS rules in plain English. The author is not a CPA, enrolled agent, attorney, financial advisor, or tax preparer. Your situation may be different. Read our full disclaimer.
Last updated: October 24, 2026. Figures checked against IRS.gov and SSA.gov on that date.
Getting paid on a 1099 comes with its own vocabulary. This glossary explains the tax and money terms US gig workers and side hustlers see most often, in a few plain-English sentences each. Where we have a full guide on a topic, you’ll find a “Learn more” link. Dollar figures are for 2026 unless noted. Tax numbers change every year, so check the current IRS figure before you rely on one.
Jump to: 0–9 · A · B · C · D · E · F · G · H · I · J · K · L · M · N · O · P · Q · R · S · T · U · V · W · X · Y · Z
0–9
Form 1099-K
An information return that payment card companies, payment apps, and online marketplaces use to report payments you received for goods or services. For 2026, a payment app or online marketplace generally only has to send one if you receive more than $20,000 and have more than 200 transactions in the year, while card payments are reported no matter how many or how much. The form doesn’t decide whether you owe tax: the income is taxable whether or not you get one.
Learn more: Made less than $600 (or $2,000)? You may still owe tax
Form 1099-MISC
An information return businesses use to report certain payments that aren’t pay for services, such as rents, prizes and awards, and “other income.” Under the IRS instructions for 2026, most of these are reported once they reach at least $2,000 for the year (royalties start at $10). Pay to a contractor for services goes on Form 1099-NEC instead.
Form 1099-NEC
The form a business uses to report nonemployee compensation, meaning what it paid an independent contractor for services. For payments made in 2026, a business generally files one if it paid you at least $2,000 during the year, up from $600 before 2026, and the threshold is scheduled to be adjusted for inflation after 2026. You still have to report all your income even if you don’t get a 1099.
Learn more: Made less than $600 (or $2,000)? You may still owe tax
A
Actual expense method
One of the two ways to deduct the cost of using your car for business. Instead of a per-mile rate, you add up real costs, such as gas, oil, repairs, tires, insurance, registration, lease payments or depreciation, parking, and tolls, then deduct the business share. If you also drive the car for personal use, you can split the costs based on the miles driven for each purpose.
Adjusted gross income (AGI)
Your total gross income minus certain “adjustments,” such as the deductible half of self-employment tax. You need your AGI to file your federal and state returns, and it affects whether you qualify for free filing options, credits, and other tax benefits.
Annualized income installment method
A way to figure your required estimated tax payments based on when you actually earned the income, which can lower or remove a penalty for the slower parts of the year if your income is uneven. You use it by filing Form 2210 with Schedule AI.
Learn more: Quarterly estimated taxes for gig workers
B
Backup withholding
Federal tax a payer may be required to hold back from payments to you, for example when you don’t provide a correct taxpayer identification number on Form W-9. The backup withholding rate is 24%.
D
Deduction vs. credit
A deduction is an amount you subtract from your income, so you don’t pay tax on it, and how much it saves depends on your tax rate. A credit is an amount you subtract from the tax you owe. Some credits, such as the Earned Income Tax Credit, are refundable, so you can get back more than you paid in taxes.
E
EIN (Employer Identification Number)
A tax ID number the IRS issues to businesses. You generally need one to hire employees, run a partnership or corporation, or pay certain excise taxes, and a sole proprietor who has one may give either an EIN or a Social Security number on Form W-9. EINs are free from the IRS, so be wary of websites that charge for one.
Estimated tax payments (Form 1040-ES)
Payments you make during the year on income that has no tax withheld, such as gig earnings, to cover both income tax and self-employment tax. You generally have to pay if you expect to owe at least $1,000 for 2026 after withholding and refundable credits. The 2026 due dates are April 15, June 15, and September 15, 2026, and January 15, 2027.
Learn more: Quarterly estimated taxes for gig workers
G
Gross vs. net income
Gross income is the total you receive before expenses. For example, the amount in box 1a of a Form 1099-K is a gross figure that isn’t reduced for fees or refunds. Net income (net profit) is what’s left after you subtract deductible business expenses on Schedule C, and it’s the starting point for self-employment tax.
Learn more: How much to set aside for taxes
I
Independent contractor
Under the IRS’s general rule, you’re an independent contractor if the person paying you has the right to control or direct only the result of your work, not what will be done and how it will be done. What counts is the actual relationship, not what it’s called. Contractors generally pay self-employment tax and don’t have tax withheld, while employees usually get a Form W-2.
M
Marginal vs. effective tax rate
Your marginal rate is the rate on your next dollar of taxable income, which is the rate of the highest tax bracket you reach. Your effective rate is your total tax divided by your income, and it’s usually lower because income is taxed in layers. Moving into a higher bracket only raises the rate on the part of your income inside that bracket.
Learn more: How much to set aside for taxes
Mileage log
A written record of your business driving. IRS Publication 463 says your car records should show the mileage for each business use, the date, your business destination, the business purpose, and your total miles for the year. A log you update weekly counts as a timely record.
Learn more: How much to set aside for taxes
N
Net earnings from self-employment
The amount self-employment tax is figured on, generally 92.35% of your net profit from self-employment. If it’s $400 or more, you generally have to file a federal return and pay self-employment tax, even for a part-time side gig. By our arithmetic, that works out to about $433.14 of net profit.
Learn more: Made less than $600 (or $2,000)? You may still owe tax
O
Ordinary and necessary expense
The IRS test a business expense has to pass to be deductible. An ordinary expense is one that is common and accepted in your trade or business. A necessary expense is one that is helpful and appropriate for your business, and it doesn’t have to be indispensable.
Q
Qualified business income (QBI) deduction
A deduction that lets many sole proprietors deduct up to 20% of their qualified business income, generally limited to 20% of taxable income (minus net capital gain). You can take it whether you itemize or use the standard deduction. Starting in 2026, there’s a minimum $400 deduction if you have at least $1,000 of QBI from a business you actively participate in.
Learn more: How much to set aside for taxes
R
Recordkeeping
Keeping records of the money you receive and receipts for your expenses, so you can report all your income and back up your deductions. Generally, you keep the records that support your return until the period of limitations runs out, which is 3 years in many cases and longer in others.
Learn more: Made less than $600 (or $2,000)? You may still owe tax
S
Safe harbor
Payment levels that generally protect you from the estimated tax underpayment penalty. For 2026, that means paying on time at least the smaller of 90% of your 2026 tax or 100% of your 2025 tax (110% if your 2025 AGI was over $150,000, or $75,000 married filing separately), or owing less than $1,000. Meeting a safe harbor doesn’t mean you won’t owe more when you file.
Learn more: Quarterly estimated taxes for gig workers
Schedule C
The Form 1040 schedule sole proprietors use to report business income and expenses, and the place most gig income gets reported. Your Schedule C net profit is the starting point for self-employment tax on Schedule SE.
Learn more: Made less than $600 (or $2,000)? You may still owe tax
Schedule SE
The Form 1040 schedule that figures your self-employment tax on net earnings from self-employment. The Social Security Administration uses the information from Schedule SE to figure your benefits.
Learn more: Made less than $600 (or $2,000)? You may still owe tax
Self-employment tax
Social Security and Medicare tax for people who work for themselves. The rate is 15.3% (12.4% Social Security plus 2.9% Medicare), and the Social Security part applies only up to the annual wage base, which is $184,500 for 2026. You can deduct the employer-equivalent half of it when figuring your AGI.
Learn more: How much to set aside for taxes
Social Security credits
Credits you earn toward Social Security eligibility from wages and self-employment income. In 2026, you earn one credit for every $1,890 of covered earnings, up to four credits ($7,560) a year. You generally need 40 credits to qualify for retirement benefits.
Learn more: Made less than $600 (or $2,000)? You may still owe tax
Sole proprietor
Someone who owns an unincorporated business by themselves. Sole proprietors report business income and expenses on Schedule C. If you’re the only member of an LLC and you elect to have it treated as a corporation, you’re not a sole proprietor.
Standard deduction
A set dollar amount that reduces the income you’re taxed on, which you can take if you don’t itemize. For 2026, it’s $16,100 for single filers and married filing separately, $32,200 for married filing jointly, and $24,150 for heads of household. The amount is adjusted for inflation each year, and it can be higher if you’re 65 or older or blind.
Learn more: How much to set aside for taxes
Standard mileage rate
A set amount per business mile you can deduct instead of tracking actual car costs. For 2026, the business rate is 72.5 cents a mile for January 1 through June 30 and 76 cents a mile for July 1 through December 31, and business parking fees and tolls can be deducted on top of it. To use it for a car you own, you have to choose it in the first year you use the car for business.
Learn more: How much to set aside for taxes
T
Tax bracket
A range of taxable income that’s taxed at a set rate. For 2026, federal rates run from 10% to 37%, and for single filers the 10% rate covers the first $12,400 of taxable income. You pay a higher rate only on the part of your income that falls in the higher bracket.
Learn more: How much to set aside for taxes
Third-party settlement organization (TPSO)
The IRS term for payment apps and online marketplaces that handle payments for goods and services. TPSOs report payments to you on Form 1099-K, and for 2026 they’re generally required to only when you receive more than $20,000 and have more than 200 transactions, though they may send one for less.
Learn more: Made less than $600 (or $2,000)? You may still owe tax
Tips deduction (“no tax on tips”)
For 2025 through 2028, employees and self-employed people in IRS-listed tipped occupations may deduct up to $25,000 of qualified tips, whether or not they itemize. For the self-employed, the deduction can’t be more than the net income from the business where the tips were earned, and it phases out when modified AGI is over $150,000 ($300,000 for joint filers). It’s claimed on Schedule 1-A, not Schedule C, so it doesn’t lower the net profit self-employment tax is figured on.
Learn more: How much to set aside for taxes
U
Underpayment penalty (Form 2210)
A charge for not paying enough estimated tax by each due date, figured separately for each payment period, and you can owe it even if you get a refund. It works like interest: the amount you were short, times the days it stayed unpaid, times the IRS underpayment rate (7% a year for October through December 2026). The IRS generally figures it and sends a bill, so most people don’t need to file Form 2210 unless they’re asking for a waiver or using the annualized method.
Learn more: Quarterly estimated taxes for gig workers
W
W-2 (Form W-2)
The Wage and Tax Statement an employer files for each employee, showing wages and the taxes withheld. If you have a W-2 job plus gig income, you can have more tax withheld from your paycheck (with a new Form W-4 and the IRS Tax Withholding Estimator) instead of, or along with, making estimated payments.
Learn more: Quarterly estimated taxes for gig workers
W-9 (Form W-9)
The “Request for Taxpayer Identification Number and Certification.” You use it to give your correct taxpayer ID number to a business that has to file an information return, such as a 1099, about payments to you. Not giving a correct number can lead to backup withholding.
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