Why gig drivers get crushed in April
Every rideshare and delivery payout arrives with zero tax withheld. Drivers who don't set aside through the year owe thousands at filing — and may also owe underpayment penalties for skipping quarterly estimates.
- • US: 15.3% self-employment tax (SS + Medicare, both halves) on net SE profit, plus federal + state income tax.
- • UK: Class 4 NIC at 6% on profits £12,570–£50,270, then 2%, plus income tax bands.
- • Canada: CPP self-employed contribution at 11.4% on net up to YMPE, plus federal + provincial.
- • Australia: no separate SE tax, but PAYG instalments apply and you must fund your own super.
Track mileage from app-on to app-off
Standard mileage is the most important deduction in the US ($0.70/mi for 2025) and similar in many other jurisdictions. Track every business mile — including dead miles between rides — from the moment you go online. Tools like Stride, Everlance, MileIQ, or Hurdlr auto-track. The deduction often turns a $50k gross year into a $30k taxable year.
Pay quarterly or get fined
US gig drivers must pay estimated taxes quarterly (Apr 15, Jun 15, Sep 15, Jan 15) if expected tax owed exceeds $1,000. Skipping payments triggers IRS underpayment penalties even if you settle in April. Move the calculator's weekly reserve to a separate high-yield account so the money is actually there when the form comes due.
Related guides
Long-form playbooks on the same topic, written by the RevenueLab editorial team.
FAQ
How much should I set aside from each Uber / DoorDash payout?
Most full-time US gig drivers should reserve 20–30% of gross after mileage deduction. Part-timers in higher tax brackets sometimes need 30–35%. Run this calculator with your actual miles and bracket — guesswork is what lands drivers with surprise tax bills.
Can I deduct car payments and gas?
In the US you pick one method: standard mileage ($0.70/mi for 2025) OR actual expenses (gas, depreciation, lease, insurance × business %). Standard mileage usually wins for gig drivers because the rate already includes depreciation.
Do gig platforms send a 1099?
US: Yes — 1099-NEC if you earned $600+ from a platform, or 1099-K from third-party payment processors above thresholds. Even if you don't get one, you still owe tax on the income.
What happens if I don't pay quarterly estimates?
The IRS charges an underpayment penalty (currently ~8% annualized) on what you should have paid each quarter. Set up automatic quarterly transfers to avoid it.