Short answer. Every time gig money lands, move a set percentage of it, after expenses, into a separate account you don't spend from. Self-employment tax alone is 15.3% of net earnings, and income tax comes on top, so base your percentage on last year's return or the Form 1040-ES worksheet. If you expect to owe $1,000 or more to the IRS (or more than $400 to New Jersey), pay quarterly from that account.
Why gig income needs its own plan
The IRS says you must report all your gig income, "even if you don't receive Forms 1099." On top of income tax, the IRS says self-employment tax is 15.3%: 12.4% for Social Security and 2.9% for Medicare. You owe it and file Schedule SE when net earnings from self-employment are $400 or more. In 2026, the Social Security part applies to the first $184,500 of combined wages and self-employment earnings. You can deduct the employer-equivalent part of self-employment tax when figuring adjusted gross income.
Step 1: Open a separate account for tax money
A plain savings account at your bank, used only for taxes, is enough. The point is to see the money as already spent.
Step 2: Track what you earn and what it costs
Self-employment tax is figured on net earnings, so keep receipts and records of expenses as you go, as the IRS gig page suggests. A notebook or spreadsheet with date, platform, payout and expense is enough to start.
Step 3: Pick your set-aside percentage
There's no single right number. Two ways to find yours:
- From last year: look at last year's return and see how much tax you owed compared with your income, then add room for self-employment tax on the new earnings.
- From the IRS worksheet: the Form 1040-ES worksheet estimates this year's tax from expected income, deductions and credits. The IRS estimated taxes page says to recalculate later in the year if your income estimate changes.
Because self-employment tax alone is 15.3%, a set-aside below that won't cover it. If the side income is small and your regular job withholds tax, your figure may be lower than someone whose gig is their main income.
Step 4: Move it the day you're paid
Each payout, subtract that payout's expenses and move your percentage of the rest. Doing it the same day, every time, matters more than getting the percentage perfect in week one.
Step 5: Pay quarterly if you need to
- Federal: the IRS says individuals generally must make estimated payments if they expect to owe $1,000 or more when they file. Most people avoid the underpayment penalty by paying at least 90% of this year's tax or 100% of last year's, whichever is smaller; special rules apply to some higher-income taxpayers (Publication 505). The IRS gig page lists April 15, June 15, September 15 and January 15 as due dates.
- New Jersey: the Division of Taxation says to make estimated payments if you expect to owe more than $400 in NJ income tax after withholding and credits, in four installments on the same dates, moving to the next business day on weekends and holidays.
Another option if you also have a job
The IRS says you may avoid estimated payments on gig income by having more tax withheld from your paycheck. Use the IRS Tax Withholding Estimator and give your employer a new Form W-4.
Step 6: Check in each quarter
Every three months, compare what's in the tax account with your estimate. Raise the percentage if earnings grew. For the bigger picture, see our guide to estimated taxes for the self-employed, the quarterly estimated tax calculator and gig and rideshare taxes in New Jersey.
Example week (hypothetical payouts and rate)
Three payouts this week: $210, $185, $260, for $655. Gas and supplies: $95. Net: $560.
- At a 25% set-aside (a made-up rate for this example), $140 goes to the tax account.
- For scale: 15.3% of $560 is $85.68. Schedule SE works out the exact base, so treat that as a rough guide to the self-employment tax piece; the rest of the set-aside is for income tax.
Your percentage comes from your own return or the 1040-ES worksheet, not from this example.
Sources
- IRS: Manage taxes for your gig work (reviewed June 28, 2026)
- IRS: Self-employment tax (reviewed Oct. 30, 2026)
- IRS: Estimated taxes (reviewed Sept. 25, 2026)
- NJ Division of Taxation: Estimated payments (updated June 29, 2026)
Common questions
Do I owe tax on gig income if I didn't get a 1099?
Yes. The IRS says you must report all income on your return, even if you don't receive Forms 1099 from the businesses that pay you.
What if I made less than $400 from my side gig?
The $400 figure is the threshold for self-employment tax and Schedule SE. The income itself still has to be reported on your return.
What percentage should I set aside?
There's no single number. Self-employment tax alone is 15.3% of net earnings, and income tax depends on your whole situation. Use last year's return or the Form 1040-ES worksheet to find yours.
Do I have to pay quarterly?
The IRS says you generally must if you expect to owe $1,000 or more when you file. New Jersey asks for estimated payments if you expect to owe more than $400 in state income tax.
Can I skip quarterly payments if I also have a regular job?
The IRS says you may be able to by having more tax withheld from your paycheck. Use its Tax Withholding Estimator and file a new Form W-4 with your employer.
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This guide is general information, checked November 2026 against the official pages listed in Sources. It is not tax, legal or financial advice. For your own numbers, use the IRS and New Jersey worksheets or ask a tax professional.