Getting through tax season without a shock

The hardest part of gig work for a lot of people is not the driving. It is opening a tax bill in April for money that was spent in June.

Nobody withholds anything for you. The money lands in your account and it looks like yours, and some of it is not.

If you expect to owe more than $1,000 in tax for the year, the IRS wants payments four times a year rather than one lump in April.

One thing worth knowing: those quarters are not calendar quarters. The periods are January through March, April through May, June through August, and September through December. The second and third ones are shorter than people expect, and missing that is a common way to underpay by accident.

If you owe less than $1,000 for the year, you do not have to worry about this at all.

There is a rule called safe harbor and it is the most useful thing in this whole area.

If you pay at least as much as your total tax from last year, spread across the four deadlines, the IRS will not charge you an underpayment penalty. It does not matter if you have a huge year and end up owing more. You settle the difference in April with no penalty.

If your income was over $150,000 last year the threshold is 110 percent of last year rather than 100 percent. For most gig workers it is the flat version.

What this means in practice is that you do not need to predict your year accurately. You need one number from last year and a weekly amount to set aside.

Mileage is the big one, and it is worth repeating because so many people leave money on it. Every business mile counts, including driving to a busy zone and driving between orders. Not your commute from home to wherever you start, but a lot more than people assume.

Phone and data are partly deductible, based on the share you use for work. A car mount, an insulated bag, a charger. Parking and tolls while working.

If you use the standard mileage rate you cannot also deduct gas and maintenance separately, because the rate already covers them. You pick one method. For most drivers the standard rate comes out ahead, but not always, and it is worth checking once.

The advice you usually hear is to put aside 30 percent of everything. That is a blunt instrument. It is too much for a lot of people and not enough for some.

A better version is to work out what you actually owe based on your real profit after mileage, then divide it into a weekly number. It is a smaller number than 30 percent for most drivers, and because it is based on something real you are more likely to stick to it.