You have a regular W-2 job. Since spring you have also been driving for DoorDash, Uber, Instacart or something similar a few evenings a week, and it is now mid-October. You have not made a single estimated tax payment. You are wondering whether to send the IRS a lump sum on January 15, or whether it is simply too late to avoid a bill and a penalty.
Short answer: it is not too late, and a January check is usually the weaker fix. Give your employer a new Form W-4 this week with an extra dollar amount in Step 4(c). Unless you choose otherwise, the IRS treats tax withheld from wages as paid evenly across all four 2026 due dates, even if it comes out of your November and December paychecks. Size the amount from your side-gig profit, which means getting your business miles right first: 72.5¢ a mile through June 30 and 76¢ from July 1. Divide the tax on that profit by the paychecks you have left.
Who this is for: anyone with W-2 wages (theirs or a spouse's, on a joint return) plus 1099 side income from driving. Who it is not for: full-time gig drivers with no paycheck to withhold from. You need estimated payments instead, and the estimated-tax prep guide covers how to work out the January 15 amount. It is also not for W-2 employees whose only driving is for their employer. That mileage is not deductible on your federal return, which the W-2 mileage guide explains state by state.
Why withholding beats a January 15 payment
Estimated tax is due in four installments. For 2026 the due dates were April 15, June 15 and September 15, and the last one is January 15, 2027. If you underpaid an installment, the penalty is interest on the shortfall from its due date until you pay it. For individuals that interest rate is 7% a year for October–December 2026, and the IRS resets it each quarter.
The two fixes are counted differently:
- An estimated payment counts on the day you make it. A January 15 check covers the fourth installment, but the April, June and September shortfalls have already been accruing interest.
- Withholding counts as paid one-quarter on each due date unless you elect on Form 2210 to use the dates it was actually withheld. Extra tax withheld from your last few paychecks is spread back across April, June, September and January.
To show the size of it: suppose the side gig adds about $2,137 of tax and you pay none of it until April. At 7%, the underpayment penalty comes to roughly $100. A single January 15 payment of the full amount still leaves about $60 of it. The same $2,137 withheld from November and December paychecks generally brings it to zero. These are approximations, because the rate for 2027 hasn't been set yet. The penalty is not huge either way. The bigger win is not facing a $2,000 balance in April.
Check this first. You may owe no penalty at all. Even with no estimated payments, there is no penalty if your 2026 withholding reaches 100% of the total tax on your 2025 return (110% if your 2025 AGI was over $150,000), or 90% of your 2026 tax. You also escape it if you owe less than $1,000 after withholding. Many people who only started driving this year already meet the prior-year test through their paycheck. In that case the extra withholding is about avoiding a big April bill, not a penalty. The first-tax-year guide walks through that test.
Step 1: Get the side-gig profit right, starting with the miles
You owe tax on profit, not on what the app paid you. For most drivers, the standard mileage deduction is the largest number between those two figures. In 2026 it is also split in two, because the IRS raised the business rate mid-year:
- January 1–June 30, 2026: 72.5¢ per business mile
- July 1–December 31, 2026: 76¢ per business mile
Add up your business miles in each half separately. If you have not been logging, now is the time to rebuild the earlier months while the platform trip histories are still easy to pull; how to reconstruct a mileage log covers what counts as a credible rebuild. The drive from home to your first pickup is a judgment call that trips up people with day jobs. The rules are in business miles vs commuting miles.
Step 2: Estimate the tax on that profit
Take one person as an example. Jamie is single, earns a $72,000 salary with withholding already right for that salary, and began delivering in April. Jamie expects $13,000 of gig pay for 2026, with 3,100 business miles before July 1 and 4,400 after (including a December estimate), plus $400 of other costs such as a share of the phone bill and an insulated bag.
| Line | With a mileage log | No log |
|---|---|---|
| Gig pay (1099) | $13,000.00 | $13,000.00 |
| 3,100 mi × 72.5¢ (Jan–Jun) | −$2,247.50 | — |
| 4,400 mi × 76¢ (Jul–Dec) | −$3,344.00 | — |
| Phone share, bag, supplies | −$400.00 | −$400.00 |
| Net profit (Schedule C) | $7,008.50 | $12,600.00 |
| Self-employment tax (15.3% of 92.35% of profit) | $990 | $1,780 |
| Income tax at 22%, after half of SE tax and the 20% QBI deduction | $1,146 | $2,061 |
| Extra federal tax from the gig | ≈ $2,137 | ≈ $3,841 |
A $72,000 salary, less the 2026 single standard deduction of $16,100, puts Jamie in the 22% bracket, which runs from $50,400 to $105,700 of taxable income for a single filer in 2026. The gig profit stays inside that bracket. Use your own bracket, and add your state's income tax if your state taxes wages. Without the log, Jamie would size the W-4 for about $1,700 more than the tax actually owed. That is $1,700 of paychecks held back until a refund in spring.
Social Security tax on wages and on self-employment earnings shares one yearly cap ($184,500 for 2026). If your salary is near that cap, your self-employment tax will be lower than this simple estimate. The IRS estimator below accounts for that.
Step 3: Turn it into a W-4 number
The 2026 Form W-4 gives you two routes for self-employment income, and Step 4(a) isn't one of them:
- The IRS Tax Withholding Estimator at IRS.gov/W4App. The W-4 instructions point you here if you have self-employment income. Have your latest pay stub ready (it shows year-to-date withholding), plus your gig gross and expenses. It produces a filled-in W-4.
- A flat extra amount in Step 4(c), “Extra withholding”: the tax from Step 2 divided by the paychecks left after the form takes effect. For Jamie, paid every two weeks with five paychecks left: $2,137 ÷ 5 ≈ $430 a paycheck. If payroll doesn't apply it until mid-November and only three are left, it is about $715.
Leave your gig income out of Step 4(a), “Other income (not from jobs)”. The form's own instructions say not to include income from any jobs or self-employment there. Step 4(a) is for things like interest and dividends, and it only feeds the income-tax calculation, so the self-employment tax would go uncovered.
If you already put some money aside for taxes, the withholding can come out of that savings rather than your grocery budget. Your take-home pay drops by the 4(c) amount, and you move the same amount back from the tax savings account.
Step 4: Hand it in this week and check the next pay stub
When you replace a W-4, your employer has until the start of the first payroll period ending on or after the 30th day after receiving it. Many payroll systems update it on the next run, but you can't count on that. A form submitted in late November might not take effect until the last paycheck of the year, or might miss 2026 entirely. On your next stub, check that the federal income tax line went up by about the 4(c) amount.
If you are paid a year-end bonus, that check is also withholding. Count what comes out of it toward the total.
Step 5: Reset it in January
A W-4 stays in effect until you replace it. Your Step 4(c) amount will keep coming out of every 2027 paycheck. That may suit you if you keep driving. Either way, submit a new W-4 in January sized to 2027, using the 2027 mileage rate once the IRS announces it.
Where TaxMiles fits, and where it doesn't
The withholding mechanics are entirely between you, your employer and the IRS. TaxMiles does not fill in a W-4, and it doesn't know your salary or what your paycheck already withholds. What it does do is the number that sets the size of everything above. It records each drive automatically and lets you mark it business or personal. The Taxes tab then shows the year's business miles and the mileage deduction priced at the IRS rate in force on each trip's date, so a 2026 total automatically splits at 72.5¢ and 76¢.
The free plan covers your first 40 business trips in total, not per month. TaxMiles Pro unlocks the Estimated Taxes tool, which keeps a running year-to-date set-aside figure from income you enter, along with reports and exports. Treat that estimate as a rough guide for the side gig only. It applies one tax rate you choose, and since it can't see your W-2 wages, the IRS estimator is the better tool for the W-4 number itself.
Frequently asked questions
Is it too late in the year to fix side-gig taxes with my W-4?
No. Unless you choose otherwise on Form 2210, the IRS treats federal income tax withheld from your wages as paid in four equal parts on the four estimated-tax due dates, no matter which paychecks it came out of. Extra withholding taken in November and December therefore counts toward April, June and September as well. Hand your employer the new W-4 now: they have until the first payroll period ending on or after the 30th day after they receive it.
Do I put my gig income in Step 4(a) of the W-4?
No. The 2026 Form W-4 instructions say Step 4(a) should not include income from jobs or self-employment. For self-employment income, the form points you to the IRS Tax Withholding Estimator at IRS.gov/W4App, or you can enter a flat extra dollar amount per pay period in Step 4(c).
Does extra withholding cover self-employment tax too?
Yes. Withholding is a payment toward your total tax for the year, and that total includes the self-employment tax from Schedule SE. Size the Step 4(c) amount to cover both the income tax and the self-employment tax on your side-gig profit.
Will the extra withholding carry into 2027?
Yes, unless you change it. A Form W-4 stays in effect until you give your employer a new one, so the extra amount in Step 4(c) keeps coming out of every paycheck in January. Submit a new W-4 early in 2027 with an amount sized for 2027.
My spouse has the W-2 job and I do the gig. Can we use their W-4?
Yes, if you file a joint return. Withholding from either spouse's wages counts toward the tax on the joint return, so the spouse with the paycheck can add the extra amount in Step 4(c).
Get the miles right before you size the W-4
TaxMiles logs each drive on its own and totals your 2026 business miles at 72.5¢ and 76¢, so the profit you withhold for is the real one.
Get TaxMilesRelated reading: how much to set aside for taxes on 1099 income; self-employment tax for gig drivers; and the 2026 mileage calculator, which splits miles at July 1 for you.
Sources: IRS Form W-4 (2026) (Step 4(a) excludes self-employment income; Step 4(c) extra withholding; self-employment and estimator instructions); IRS Form 1040-ES (2026) (who must pay, 90%/100%/110% rules, $1,000 threshold, January 15, 2027 due date, 2026 standard deduction and Schedule X brackets); IRS Publication 505 (2026) and the Instructions for Form 2210 (withholding treated as paid one-fourth on each due date unless you elect actual dates); IRS Publication 15 (2026) (when an employer must apply a replacement W-4; earlier W-4s stay in effect); IRS IR-2026-98 (7% underpayment rate, October–December 2026); IRS standard mileage rates (72.5¢ January 1–June 30 and 76¢ July 1–December 31, 2026); SSA contribution and benefit base ($184,500 for 2026). Penalty figures are approximations at 7% simple interest. Checked October 16, 2026.
This article is general information for US taxpayers, not tax or accounting advice. The worked example is simplified (one filer, one bracket, no credits or other income). Your withholding target depends on your full return, so run the IRS estimator or ask a tax professional. TaxMiles is published by Gigabyte LLC, the company that wrote this page, and is not affiliated with the IRS or any gig platform. Phone Diet, RecipeScan and Trending Music below are also our apps. Apple and iPhone are trademarks of Apple Inc., which doesn’t endorse this article.