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Learn how gig workers and freelancers can claim self-employed tax credits. Discover health, startup, mileage and QBI deductions to maximize your refund.
Are you a gig worker? If so, you might be eligible for valuable tax credits and, chances are, no one’s told you. It’s estimated that tens of billions in tax credits go unclaimed annually and roughly 80% of available business credits are never used.
If you’re driving, delivering, freelancing or juggling a few different gigs, you’re likely considered self-employed. That means the IRS sees you as a business owner. Like any business, you have access to credits and deductions designed to lighten your tax load, provided you know how to find and apply for them.
If you earn income by offering services through platforms like Uber, DoorDash, Upwork, Fiverr, Instacart or by selling content as a creator on YouTube or Substack, you’re likely a gig worker. This type of work falls under what’s often called the gig economy or platform-based labor.
Gig work is flexible, independent and often project-based. It includes roles, such as:
Here’s the key distinction: if you receive a 1099 form (not a W-2) at the end of the year and no taxes are withheld from your income, you’re considered self-employed by the IRS. That means you’re technically running a business, even if it’s just you. And as a business owner, you may be eligible for the same kinds of tax credits and deductions used by larger companies.
W-2 employees, on the other hand, typically have taxes taken out of their paychecks and have fewer options when it comes to claiming business-related credits. So, if you’re purely a W-2 employee, these tax credits likely won’t apply.
One of the biggest challenges gig workers face isn’t just earning enough. It’s keeping more of what they earn. And far too many workers pay more in taxes than they need to.
Most gig workers don’t have a certified public accountant (CPA) on speed dial. Many rely on basic tax software or do-it-yourself filing platforms, which often don’t flag credits or opportunities specific to self-employed workers. Without expert support, it's easy to miss key tax-saving opportunities.
Some gig workers worry that claiming certain credits or deductions could trigger an audit, so they play it safe and skip them altogether. Others are misclassified or unsure about what they're even eligible for. But fear shouldn’t stop you from claiming what you’re legally entitled to, especially when it could mean thousands back in your pocket.
Deductions and credits aren’t the same, but they often get lumped together. Deductions reduce how much of your income is taxed, while credits reduce your actual tax bill, dollar-for-dollar. For example, a $2,000 credit cuts your taxes by $2,000. That’s powerful, yet most gig workers only think in terms of deductible expenses like mileage or home internet.
Apps like Uber, DoorDash and Fiverr are designed to track earnings, not optimize taxes. They’ll send you a 1099 at the end of the year and that’s where their support usually stops. They don’t offer guidance on what you can claim or how to structure your work for tax savings. That burden falls on you and, without guidance, many gig workers simply overpay.
As a self-employed individual, you may be eligible for powerful tax credits and deductions that can significantly reduce your tax liability.
If you pay for your own health insurance because you don’t have coverage through an employer or spouse, you may qualify for the Self-Employed Health Insurance Deduction. This lets you deduct premiums for medical, dental and even long-term care insurance for yourself, your spouse and your dependents.
For example, if you’re a freelance designer paying $350 per month for a health plan, that’s $4,200 annually you can deduct, directly reducing your taxable income.
To claim it:
The QBI deduction allows eligible self-employed individuals and owners of pass-through entities to deduct up to 20% of their qualified business income. It can be a substantial break for gig workers who report income on Schedule C.
Imagine a rideshare driver who earns $40,000 in net self-employment income. They may qualify to deduct up to $8,000 under QBI, without needing to itemize their deductions.
To claim it:
If you use a specific space in your home exclusively and regularly for work, the IRS allows you to deduct a portion of your housing expenses. This includes things like rent, utilities, repairs and even internet costs.
Let’s say you’re a freelance writer using a 120-square-foot spare bedroom in a 1,200-square-foot apartment. That’s 10% of your home, which means 10% of qualifying expenses may be deductible.
To claim it:
Driving for business — whether for deliveries, meetings or client work — may entitle you to deduct car-related expenses. You can choose between the standard mileage rate and the actual expense method.
A delivery driver who logs 10,000 business miles in 2024 could deduct $6,700 using the standard mileage rate of 67 cents per mile.
To claim it:
If you started your gig work recently, you may be able to deduct up to $5,000 in qualified startup costs. These include the cost of your laptop, initial advertising, setup fees and business-related subscriptions.
For instance, a new freelance video editor who invested in editing software, a new computer and marketing could write off those expenses as startup costs.
To claim it:
The EITC is a refundable credit designed for low- to moderate-income earners. If you’re a gig worker with a modest income, especially if you have children or other dependents, you could qualify, even if you don’t owe taxes.
For example, a part-time DoorDash driver earning $18,000 with one dependent may receive over $3,000 in credits.
To claim it:
If you contribute to a retirement account — like a Roth individual retirement account (IRA), Simplified Employee Pension IRA (SEP IRA) or Solo 401(k) — you might qualify for the Saver’s Credit. It’s a way to get a tax credit on top of growing your future nest egg.
A gig worker who contributes $2,000 to a Roth IRA may be eligible for a credit worth up to $1,000, depending on their income and filing status.
To claim it:
Each of these credits is designed to support self-employed individuals and make it easier to succeed while working independently. By taking time to understand what’s available and taking action to claim what you deserve, you can reduce your tax burden drastically and increase what you keep.
Navigating taxes as a gig worker isn’t easy. Between juggling multiple income streams, platforms and expenses, it’s no surprise that many independent earners make costly errors come tax season. Here are some of the most common pitfalls we see and how to avoid them:
Each of these mistakes can cost you real money, and they’re often easy to fix with a little education and the proper support.
At Anchor Accounting Services, we believe gig workers shouldn’t have to overpay just because they don’t have a dedicated accountant. That’s why we’ve built services specifically designed for self-employed earners to unlock the tax relief they’ve earned without the guesswork.
Here’s how we help:
You don’t have to go it alone. If you’re self-employed, part of the gig economy or just getting started, we invite you to request a free credit consultation. We’ll help you see what you’re eligible for and show you exactly how to claim it.
There isn’t a specific “self-employment tax credit.” However, self-employed individuals can reduce their tax burden through multiple deductions and credits, such as the QBI deduction, Self-Employed Health Insurance deduction and credits like the EITC. These reduce your taxable income or tax liability based on your business income, expenses and filing status.
Yes, credit card processing fees are generally deductible but only if they’re directly related to your business. For example, if you're a freelancer who uses PayPal or Stripe to accept payments and incur transaction fees, those costs can be written off as business expenses on Schedule C. Personal credit card interest or fees, however, are not deductible.
Yes, self-employed workers can qualify for the EITC, as long as they meet income and eligibility requirements. This includes having earned income from self-employment, meeting certain income thresholds and in some cases, having qualifying children. Even part-time gig workers may be eligible for benefits. Use the IRS EITC Assistant to check if you qualify.
