4 Tax Deductions Side Gig Workers Can’t Afford To Miss
Written by
Jordan Rosenfeld
Edited by
Molly Sullivan
Commitment to Our Readers
GOBankingRates' editorial team is committed to bringing you unbiased reviews and information. We use data-driven methodologies to evaluate financial products and services - our reviews and ratings are not influenced by advertisers. You can read more about our editorial guidelines and our products and services review methodology.
20 Years
Helping You Live Richer
Reviewed
by Experts
Trusted by
Millions of Readers
Side gigs can be lucrative and fulfilling for many Americans, but they also come with tax complications if you don’t plan for them. There are plenty of legitimate tax deductions that freelancers and gig workers can take, so long as they know what they are and how to track them properly. Understanding which deductions matter most and how to document them correctly can reduce tax bills and improve cash flow.
Here are four tax deductions side gig workers can’t afford to miss when they file their taxes and some important tax tips.
1. The Home Office Deduction
Despite being one of the largest available deductions for many gig workers, the home office deduction remains underclaimed, according to Chad Silver, founder of Silver Tax Group, a U.S. tax law firm. “There are only an estimated 15% claimers in IRS statistics out of eligible sole proprietors, when many are working mostly at home,” he said.
Freelancers often miss this deduction or underclaim it “because they feel it’s risky,” according to Venkat Godavari, senior tax specialist at Parikh Financial. However, if you use a space exclusively for work, “it’s legit,” he said.
A good rule of thumb is to deduct between 8% and 15% of housing expenses, which can translate to thousands of dollars per year in some cities, Silver said.
Just be sure you dedicate a specific area of your home and use it exclusively and regularly for business, said Marc Pamatian, founder of Chief Bookkeeping Officer.
2. Mileage and Vehicle Deductions
Vehicle use remains one of the most valuable deductions for many gig workers, particularly drivers and freelancers who travel frequently.
Silver has observed Uber and DoorDash drivers “forego thousands of miles.” This can add up quickly over the course of a year and materially affect taxable income.
However, “Many freelancers forget to log business miles because they often confuse personal and business use,” Godavari said. Be careful not to make mistakes like deducting all your mileage or your car payment. “You must choose between the standard mileage rate and actual expenses; you cannot use both,” Godavari said.
3. Software and Digital Tools
Modern gig work depends heavily on digital tools, business-related subscriptions and educational expenses, yet many freelancers fail to deduct recurring software costs that directly support their income, Pamatian said.
Additionally, software tools like Canva, Zoom and QuickBooks are also eligible for deductions, Godavari said.
4. Small Expenses That Feel Insignificant
Tax professionals consistently see gig workers skip deductions that feel too minor to bother tracking. Over the course of a year, however, those overlooked costs can make a meaningful difference in taxable income. The experts recommend tracking items such as:
- Professional development (books and online courses)
- Apps used for business
- A percentage of your cellphone bill if used for business
- Payment processor and bank fees
- Office supplies
- Parking and toll charges
- Coffee shop Wi-Fi
- Coworking day passes
Poor Record Keeping Is the Real Reason People Under-Deduct
Not properly taking deductions is often a sign of lack of clarity, Pamatian said. “First-time gig workers often under-deduct on their tax returns because they lack a clear understanding of eligible expenses directly tied to their work.”
Another common fear is triggering audits, he said, leading them to omit legitimate deductions.
“However, the IRS is much more interested in documentation than size,” Silver said. In other words, you need to bring the receipts.
“Guesses do not work here,” Godavari said.
Do New 2026 Tax Laws Change the Deduction Landscape?
While many gig workers expect sweeping changes from new tax legislation, most freelancers should focus on optimizing existing deductions.
The new deductions introduced in 2026 under the One Big Beautiful Bill Act (OBBBA) are not specific to gig workers, Godavari said. “Therefore, I advise you to focus on maximizing the existing ones,” Godavari said.
Claiming the Right Deductions Improves Cash Flow All Year
Beyond lowering tax bills, proper deductions can significantly reduce quarterly estimated payments and ease cash flow stress. “As a result, you have a better cash flow, which means less scrambling at tax time,” Godavari said.
Pamatian said it’s always worth it to claim any legitimate deduction, no matter how small. “I’ve seen business owners save hundreds simply by methodically tracking what might feel like ‘minor’ expenses.”
For side-gig workers, the difference between overpaying and keeping more of what you earn often comes down to consistent tracking, solid documentation and the confidence to claim deductions you’re legally entitled to take.
More From GOBankingRates
