If you are already filing a return for any other reason, the $400 changes nothing for you. Read the third section and move on.

"You do not have to file under $400" is the most repeated sentence in gig work, and it goes wrong in two separate places at once.

The short answer

What people think What it says
$400 of payouts $400 of net earnings — after expenses, times 92.35%
Roughly $400 of profit Roughly $433 of profit
Under it, no return needed Under it, one trigger did not fire. Others still can
Under it, the income is tax-free The income is income either way

The sentence, in full

The IRS states both halves in consecutive lines, and almost everyone quotes only the first:

"You have to file an income tax return if your net earnings from self-employment were $400 or more. If your net earnings from self-employment were less than $400, you still have to file an income tax return if you meet any other filing requirement listed in the Form 1040 and 1040-SR instructions."

The second sentence is the one that matters for most people reading this, because most people have something else going on — wages, a spouse's income, a credit worth claiming, withholding they would like back.

It is a profit test, not an income test

This is the part that helps you, and it is worth being precise about.

Net earnings from self-employment are not what a platform paid you. They start at your profit — payouts minus deductible business expenses — and are then multiplied by 92.35%, the adjustment that stands in for the employer's half of payroll tax that an employee never sees.

So the chain is:

Step Example
Platform payouts $900
Less deductible expenses −$500
Net profit $400
× 92.35%
Net earnings $369

$369 is under $400. That driver has not tripped the self-employment filing trigger, despite $900 of payouts.

Run it the other way and the crossover appears: $433 of profit × 92.35% ≈ $400. That is the profit figure the $400 test really describes, and it is the number worth remembering.

Which means expenses matter below the line tooMost people think tracking mileage and fees only pays off once the numbers get big. It also decides whether a small year crosses a threshold at all.

Why "under $400" rarely ends the conversation

Falling under the test removes exactly one reason you might be required to file. The Form 1040 instructions list the others, and for independent workers the common ones are:

  • You had wages too. A W-2 job usually requires a return on its own, and once you are filing, the side income goes on it.
  • You are married filing jointly and your spouse's situation requires a return.
  • You had tax withheld — including backup withholding at 24% — and want it back. Nobody refunds money you do not ask for.
  • You qualify for a refundable credit. Some are worth more than the return costs to file.
  • You had other self-employment income in a different activity. The test is on your total net earnings, not per platform.

That last one catches multi-app workers. Three platforms at $200 of profit each is $600 of profit, not three separate $200 questions.

What it does not mean

Being under $400 does not mean:

  • The income was not income.
  • You may leave it off a return you are filing anyway.
  • The platform will not report it. The 2026 1099-NEC threshold is $2,000 and a 1099-K can arrive well below that — payment card transactions have no threshold at all.
  • Next year starts fresh in a way that erases it.

It means one specific requirement, phrased in one specific way, was not met this year.

The practical version

  1. Work out profit first. Payouts minus expenses, for every activity combined.
  2. Multiply by 92.35%. That is net earnings, and that is what the $400 is measured against.
  3. If it is $400 or more, you are filing — and you are also owing self-employment tax on it.
  4. If it is under $400, check the other filing requirements before concluding anything, especially if you had wages or any tax withheld.
  5. File anyway if tax was withheld. It is the only way to get it back.

The $400 is real and it is useful. It is just a much smaller rule than its reputation — one trigger among several, measured on a number most people never calculate.

Track it now. Thank yourself in April.

Common questions

I earned $380 driving. Do I have to file?
Not because of the self-employment trigger. But the IRS is explicit that this is only one trigger: "If your net earnings from self-employment were less than $400, you still have to file an income tax return if you meet any other filing requirement listed in the Form 1040 and 1040-SR instructions."
Is the $400 measured on what the platform paid me?
No. It is measured on net earnings from self-employment, which start from your profit after expenses and are then multiplied by 92.35%. Gross payouts are not the number.
So what profit corresponds to $400 of net earnings?
About $433. Since net earnings are 92.35% of net profit, $433 × 0.9235 is roughly $400. Below that profit you are under the test; above it you are over.
Do my expenses count before the test?
Yes, and that is what makes it a profit test rather than an income test. $900 of platform payouts with $500 of deductible costs is $400 of profit, which is about $369 of net earnings — under the line.
What is the actual sentence?
"You have to file an income tax return if your net earnings from self-employment were $400 or more." It appears on the IRS Self-Employed Individuals Tax Center.
Does being under $400 mean the income is tax-free?
No. It means one filing trigger did not fire. The income is still income, it still belongs on a return you file for any other reason, and it still counts toward everything else on that return.
I have a W-2 job and $300 of side income. Does the $400 matter?
Barely. You are almost certainly required to file because of the wages, and once you are filing, the $300 goes on the return. The $400 test decides whether self-employment alone forces a return, not whether small income disappears.
Why is it 92.35%?
It is the adjustment that mirrors the employer's half of Social Security and Medicare, which an employee never sees. It is why net earnings are always slightly less than profit.

This article is for educational purposes only and does not constitute tax, legal, or financial advice. Consult a qualified tax professional about your situation.

Official sources