Which of your money the IRS treats as self-employment income.

The IRS test

The IRS generally considers you self-employed if you carry on a trade or business as a sole proprietor or an independent contractor, or as a member of a partnership that carries on a trade or business. Income from that business is self-employment income.

For gig work, the IRS describes the activity broadly: earning income by providing on-demand work, services, or goods, through a digital platform or on your own. It names ridesharing, delivery, freelance work, and selling goods online among the examples.

What usually falls inside

Payouts from delivery and rideshare apps where you work as an independent contractor. Sales from a shop you run on a marketplace, or from your own site. Invoices paid by clients for freelance or contract work. Payments for services received through a payment app. Side work that is part-time, temporary, or small also counts; the IRS says gig income has to be reported whether it comes from part-time or side work, and whether or not it shows up on a Form 1099-K, 1099-NEC, 1099-MISC, or other statement.

What usually falls outside

Wages reported on a W-2 are employee pay, with Social Security and Medicare withheld by the employer. They are not self-employment income, even when the job is part-time.

Money from friends and family as a gift, or as repayment for a shared personal cost such as rent, a meal, or a ride, is not taxable income at all, according to the IRS, even when it arrives through the same payment app as work income.

Hobby income is its own case. The IRS describes a hobby as something done for enjoyment with no intention of making a profit, and weighs several factors, such as whether the activity is run in a businesslike way, to tell the two apart. Hobby income still has to be reported, on Schedule 1 of Form 1040, but it is handled differently from business income.

Net earnings, the figure that matters

Self-employment tax is not figured on everything that came in. It starts from net earnings: the income from the business minus the ordinary costs of running it. For a driver, that can include vehicle costs; for a seller, materials, shipping, and platform fees; for a freelancer, software and equipment used for the work.

Generally, 92.35% of those net earnings is subject to self-employment tax, at 15.3%. If net earnings for the year are under $400, no self-employment tax is due and the Schedule SE filing requirement does not apply, though the income is still reported.

The practical takeaway is the same across all of it: track the income by source, track the costs with receipts, and keep work money and personal money apart where you can. The line between them is much easier to draw as each deposit arrives than a year later.

When it is not clear

Some situations sit in the middle: a platform that classifies you one way while the work looks like another, a hobby that has started turning a profit, or income shared with a partner. Those are the cases where a qualified tax professional earns their fee. The guides here explain the general rules; they cannot see the details that decide your own case.