Question

What should a new gig worker do to manage taxes well and avoid penalties?

(1 point)
Responses

File their taxes only once at the year's end.
File their taxes only once at the year's end.

Ask the hiring company to handle all tax withholding.
Ask the hiring company to handle all tax withholding.

Set aside income for estimated quarterly tax payments.
Set aside income for estimated quarterly tax payments.

Report only income received on a 1099 form.

Answer 1

Set aside income for estimated quarterly tax payments.

Explanation: Gig workers are typically self-employed and responsible for income and self-employment taxes. Making estimated quarterly payments avoids underpayment penalties. (Also: companies usually won’t withhold, you must report all income even without a 1099, and filing only at year-end without estimated payments can trigger penalties.)