Hey friend,

If you've been turning to gig work to bridge the gap after your layoff, I need you to stop scrolling and pay attention. Because while you've been hustling to keep the lights on, the IRS changed the rules (Money, February 2025)—and most people doing exactly what you're doing have no idea.

Here's what's really going on: That DoorDash income? Those Etsy sales? The freelance writing gigs on Upwork? In just 3 months, the IRS is dropping the reporting threshold to $2,500—and most people doing exactly what you're doing have no idea what's coming.

Meet the 73% who didn't see it coming. According to a January 2025 survey by Avalara, nearly three-quarters of gig workers had no clue about the new $5,000 reporting threshold that hit this year. Even worse? 61% were completely unaware that 1099-K rules were changing at all.

Now here's what matters for you: That $5,000 threshold drops to $2,500 on January 1, 2026—just 3 months away. If you started gig work after your layoff this year, you need to get your tracking system in place NOW.

Think about what this means. Sarah drives for Uber between interviews—she's already at $3,200 since June. Marcus sells vintage finds on eBay to pay his mortgage—$4,100 so far this year. Chen does freelance design work through Fiverr—$2,800 and counting.

For 2025 (filing in April 2026), Sarah and Marcus will get 1099-K forms because they'll cross $5,000. But here's the wake-up call: In 2026 (filing in April 2027), all three will get forms because the threshold drops to $2,500. And none of them are ready.

Here's what they tried:

✔️ Kept some receipts in a shoebox

✔️ Figured they'd sort it out in April

✔️ Assumed the platforms would tell them what to report

✔️ Hoped their small income wouldn't matter

The brutal reality? The IRS already knows how much you made because payment processors are required to report it. The question isn't whether you'll pay taxes on gig income—it's whether you'll have documented your deductions before the deadline.

Let's talk about what actually changed. Previously, you'd only receive a 1099-K if you had over 200 transactions AND exceeded $20,000 (Money, February 2025). That was a high bar. Most side hustlers never hit it.

The 2021 American Rescue Plan dropped that threshold to just $600. But implementation got messy. The IRS delayed and tweaked the rollout multiple times. Here's where we are now:

The phase-in schedule:

We're at the end of September 2025. That means you have just 3 months left in the current tax year. If you've been doing gig work since your layoff and you're approaching $5,000, you need to know you'll be getting a 1099-K form in January 2026.

But here's what's more important: On January 1, 2026, the threshold drops to $2,500. That's when the net gets much wider. According to the Avalara survey, only 18% of gig workers knew about these upcoming changes. That means 82% are flying blind into an increasingly strict reporting environment.

And here's the kicker: These forms don't change how much you owe. You're required to report all self-employment income of $400 or more, whether you get a form or not. What the 1099-K does is create a paper trail that makes discrepancies between what you reported and what platforms reported glaringly obvious to the IRS.

The confusion has already caused stress. As Kael Kelly from Avalara noted, this "scrappy segment of our economy" now faces "the additional challenge of sorting out new, last-minute tax regulations." The result? More gig workers will turn to paid tax professionals when they could be handling this themselves with the right preparation.

Listen, I know you're already juggling enough. But ignoring this will cost you way more than a few hours of organization. Here's your survival plan:

1. Know What Counts as Gig Income

According to the IRS, gig work includes:

2. Track Every Single Deduction—Starting Today

This is how you turn a $5,000 gig income problem into a manageable tax bill. You can deduct business expenses including:

The key: Track them NOW for the last 3 months of 2025, not in April when you're scrambling.

3. Separate Your Money

Open a separate checking account for gig income. Makes tracking infinitely easier and protects you in an audit. Yes, even for "small" side hustles.

3. Make Quarterly Estimated Payments

If you expect to owe $1,000+ in taxes, you must pay quarterly. Remaining due dates for 2025:

Missing these? You'll face penalties and interest. If you haven't been making quarterly payments all year, at minimum make the January payment to cover Q4.

4. File Correctly

When you file, you'll need:

Time commitment: 90 minutes this week

Your mission: Set up a foolproof tracking system before another dollar comes in—because the $2,500 threshold is only 3 months away.

Step 1 (30 minutes): Gather every payment record from January 2025 to now. Check:

Step 2 (30 minutes): Create a simple spreadsheet with columns for:

Step 3 (30 minutes): Calculate where you stand:

Bonus step: Set a calendar reminder for December 15, 2025 to calculate your final 2025 numbers before the year closes.

Do this today. Not tomorrow. Today.

"For every $1 appropriated to SCORE, $45 is returned back from those small businesses in federal tax revenue." — Bridget Weston, CEO of SCORE

Translation: The help is out there. The resources exist. Don't let pride or overwhelm stop you from using them. Your future self—and your bank account—will thank you.

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🌟 Here's the truth nobody wants to tell you: The system isn't designed to make this easy. The IRS is phasing in new rules, platforms give minimal warning, and you're supposed to figure it all out while job searching and keeping your family afloat.

You're 3 months away from a new, lower threshold. That's 3 months to get your tracking system in place. 3 months to document your deductions. 3 months to avoid the panic that hit 73% of gig workers earlier this year.

The difference between getting crushed by this and using it to your advantage? Taking action before January 1, 2026.

You've already survived a layoff. You've already rebuilt. You've already proven you can figure hard things out.

This is just one more hard thing. But you've got this.

And we’re here for you.

Win
Fellow layoff survivor, creator of Let Go Weekly

P.S. Seriously, do that 90-minute challenge today. Your April 2026 self will send a thank-you note. And your January 2027 self? When that $2,500 threshold kicks in? They'll be ready because you started now.