Do I need to file taxes for income from UserTesting (Online Gig Work)? When does it become mandatory?

Thanks for the explanation! I'm in a similar boat but doing Respondent and UserInterviews instead. Question - can I deduct any portion of my internet bill since I need it to do these tests? Also, if I'm using my personal laptop, is there any depreciation I can claim?

You can absolutely deduct a portion of your internet bill as a business expense if you're using it for your gig work. The key is to determine what percentage is used for business versus personal use. For example, if you estimate 30% of your internet usage is for these testing platforms, you can deduct 30% of the cost on your Schedule C. For your laptop, you can claim depreciation if you're using it regularly for your business activities. You'd use Form 4562 for this. Alternatively, for smaller equipment purchases, you might be able to use Section 179 deduction or bonus depreciation to write off the business-use portion in the year you start using it for work.

Do they handle state taxes too? I'm in California and the state tax forms for self-employment income confuse me way more than the federal ones.

How accurate is it really? I've been burned by tax software before that missed things, and then I got a nasty letter from the IRS six months later.

Yes, they do handle state taxes! I'm actually in New York which has pretty complicated state requirements, and it walked me through all the state-specific forms I needed to file. It was especially helpful with figuring out which business expenses were deductible for state purposes since they sometimes differ from federal rules. As for accuracy, I was skeptical too after having issues with other tax programs. What convinced me was that they use actual tax professionals to review everything, not just algorithms. After I submitted everything last year, I actually got a slightly larger refund than expected because they found a credit I qualified for, and I haven't received any IRS notices.

How does this actually work though? Is it just an auto-dialer constantly calling the IRS until someone answers? Because that seems like it would just make the wait times worse for everyone...

Sorry but this sounds like a complete scam. The IRS isn't going to prioritize calls from some third-party service. You're probably just paying for something you could do yourself with enough persistence.

It's not an auto-dialer that's constantly calling - they have a sophisticated system that maintains your place in the queue. They basically wait on hold for you so you don't have to sit there listening to the hold music for hours. When they detect that an agent has picked up, they immediately call you and connect you directly to that agent. I was definitely skeptical too, but after wasting entire afternoons on hold, it was worth trying. I was connected to an actual IRS representative who helped set up a payment plan for my self-employment taxes. They don't get you "priority" - they just handle the frustrating hold time so you can go about your life until an agent is available.

Is there any way to make quarterly estimated payments for this kind of small gig work? Or do most people just pay it all when they file?

You can definitely make quarterly estimated payments, and it's actually required if you expect to owe $1,000 or more in taxes for the year. The IRS has a form called 1040-ES specifically for this purpose. I personally use the IRS Direct Pay system online to make my payments each quarter (due April, June, September, and January). Many people with smaller gig incomes do just pay at tax time, but you risk an underpayment penalty if you owe too much. When I first started, I didn't know about quarterly payments and ended up with both a tax bill AND a penalty!

Even if UserTesting doesn't send you or the IRS a 1099, you're still legally required to report all income you earn. The IRS has been increasingly focused on gig economy workers, and the penalties for intentionally not reporting income can be severe. It's simply not worth the risk - you could face penalties of 20% or more of the unpaid tax, plus interest, and in cases of deliberate evasion, even criminal charges. Better to report the $400+ and pay the relatively small tax amount than deal with potential audit issues down the road.

Thanks for the reality check. Not worth getting in trouble over a few hundred bucks. I'll track everything properly this year.

The separate bank account tip is brilliant! I wish I'd thought of that when I started doing gig work last year. Having everything mixed in with my personal expenses made tax prep such a headache. Quick question - do you know if there's a minimum amount of business expenses needed to make it worth itemizing on Schedule C? I probably spent maybe $50 on a better microphone for testing, but wasn't sure if such small amounts were worth the paperwork hassle.

@Edwards Hugo There s'no minimum threshold for business expenses on Schedule C - every legitimate business expense counts, no matter how small! That $50 microphone is absolutely worth claiming. Even small deductions add up and reduce your self-employment income dollar-for-dollar. The beauty of Schedule C is that it s'not like itemizing personal deductions where you need to exceed the standard deduction. Business expenses directly offset your business income, so that $50 microphone could save you around $12-15 in self-employment tax alone 15.3% (of $50 ,)plus whatever your income tax rate is on top of that. Don t'let the paperwork "hassle worry" you - Schedule C is pretty straightforward for simple gig work like UserTesting. Just keep that receipt and claim it under Office "supplies or" Equipment "depending" on how you want to categorize it. Every dollar in legitimate expenses is money back in your pocket!

This is really comprehensive advice! I'm new to gig work and just started with UserTesting last month. The spreadsheet idea is perfect - I've been taking screenshots of payments but not organizing them properly. Quick question about state requirements - I'm in Texas, which doesn't have state income tax. Does that mean I only need to worry about the federal Schedule C and SE forms, or are there still other state-level business requirements I should know about for self-employment income? Also, thanks for mentioning job search expenses! I hadn't thought about those being potentially deductible. I've been using a resume service and driving to interviews, so that could add up.