Introduction
Starting in 2025, California gig workers face a tighter reporting regime under both federal and state laws. The IRS has reduced the 1099-K threshold to $600, and California conforms, meaning Uber, Lyft, DoorDash, Instacart, and other platforms now send 1099-Ks to most of their workers.
This guide will explain the 2025 tax filing process for gig workers, the Franchise Tax Board’s (FTB) expectations, and how to reduce your taxable income through eligible deductions.
IRC and California Tax Code References
- IRC §6041 & §6050W – Reporting requirements for third-party payment processors
- IRC §162 – Trade or business expense deductions
- Cal. R&TC §17041 – California adjusted gross income
- FTB Pub. 1001 – Resident/nonresident source income
- IRS Form 1099-K – Payment settlement entity reporting
- IRS Schedule C / SE – Sole proprietor reporting and self-employment tax
What Changed in 2025?
- $600 threshold now applies nationwide
- Platforms like Uber and Lyft must send 1099-Ks for gross payments over $600
- California requires reporting of 1099-K income regardless of cash-out method
Example: Rideshare Driver in California
Example: Carlos, a rideshare driver in San Jose, earns $25,000 in 2025 across Uber and Lyft. Each platform issues a 1099-K.
Deductions:
- Mileage (tracked using app or logbook)
- Car washes and maintenance
- Mobile phone and data plan (percentage used for business)
- Snacks or water for passengers
Carlos reports:
- Gross income from 1099-Ks on Schedule C
- Net profit carries to Form 1040 and CA Form 540
- Pays federal self-employment tax + CA PIT
Step-by-Step: California Gig Worker Tax Filing
- Collect All 1099-Ks
From Uber, Lyft, DoorDash, etc. - Track and Categorize Expenses
Use QuickBooks Self-Employed, Keeper, or Stride. - File Federal Schedule C and Schedule SE
Calculate net income and self-employment tax. - File California Form 540
Include your business income and CA-sourced deductions. - Consider Making Estimated Tax Payments
Use FTB Form 540-ES and IRS Form 1040-ES.
Conclusion
In 2025, gig workers must prepare for more detailed 1099-K reporting and a closer look from both the IRS and California FTB. With the lower threshold, even occasional rideshare or delivery drivers may face filing obligations.
Track your expenses and file early to avoid penalties.
Call to Action
Gig worker in California and unsure about your taxes?
Schedule a call with Anshul Goyal, CPA, EA, FCA
He assists:
- Rideshare and delivery workers with 1099-K reconciliation
- Maximizing deductions legally
- Filing federal and California self-employment returns
Start clean for 2025 avoid IRS or FTB audits:
https://calendly.com/anshulcpa/
Anshul Goyal, CPA, EA, FCA
Anshul brings 15+ years of U.S. and international tax experience. He specializes in helping online sellers, foreign founders, and U.S. residents with IRS and multi-state compliance. Known for his deep knowledge in Shopify and Amazon seller tax strategy, Anshul has helped hundreds of entrepreneurs minimize taxes and scale legally.
Disclaimer
This blog is for informational purposes only and does not constitute legal or tax advice. Please consult a qualified tax professional regarding your individual tax situation.
Top 5 High-Searched FAQs (2025)
1. What is the 1099-K threshold in 2025?
$600 for both federal and California.
2. What expenses can gig workers deduct in CA?
Mileage, gas, maintenance, phone, insurance, and supplies.
3. Do I need to file taxes if I made under $600?
Possibly no 1099-K, but if your net income is over $400, self-employment tax applies.
4. Is there California self-employment tax?
No separate tax, but you still pay CA Personal Income Tax.
5. How do I pay estimated taxes in California?
Use FTB Form 540-ES for quarterly payments.