Why do gig workers need to pay taxes quarterly?

Question

Employers set each tax payment schedule to fit their business needs.
Quarterly payments are combined with union dues to streamline payments.
Since taxes are not taken out of each paycheck, quarterly payments help workers plan ahead.
It's only because gig workers do not earn a steady paycheck regularly.

Answer 1

Gig workers need to pay taxes quarterly primarily because taxes are not withheld from their income, unlike traditional employees whose employers typically withhold income taxes from each paycheck. This means gig workers must estimate their tax liability and make payments to the IRS (and possibly state tax agencies) on a quarterly basis based on their earnings.

The key points are:

• No Withholding: Since taxes aren't deducted from gig workers' earnings, they are responsible for ensuring they pay the correct amount of taxes on their own.

• Estimated Tax Payments: Quarterly payments help gig workers stay on top of their tax obligations and avoid a large tax bill at the end of the year. This system allows them to break down their tax payments into manageable amounts.

• Planning Ahead: Making quarterly payments helps workers plan their finances, ensuring they set aside enough money to cover their tax liabilities throughout the year.

In summary, quarterly payments are essential for gig workers to manage their tax responsibilities effectively without the benefit of automatic withholding.