TaskRabbit Taxes in Denver, Colorado - 2026

Updated for 2026 (Filing 2025 Taxes)

Tax Essentials for TaskRabbits in Denver, Colorado

Navigating the Mile High City as a TaskRabbit offers incredible flexibility and a steady stream of income, but you've got to remember that you're running a business. In the eyes of the IRS, you aren't just a gig worker: you're a small business owner. This means understanding the tax implications of your work is vital to keeping more of your hard-earned money in your pocket. As an independent contractor in Denver, you're responsible for both federal and state tax obligations, and staying organized is the only way to avoid a headache come April.

The IRS requires all TaskRabbits to report their earnings on Schedule C (Profit or Loss from Business) alongside your Form 1040. Since TaskRabbit doesn't withhold taxes from your payouts, you're on the hook for self-employment taxes - specifically Social Security and Medicare - on any net earnings that exceed $400. Keeping meticulous records of every supply run and mile driven across I-25 is the difference between a massive tax bill and a manageable one.

The QBI Deduction: A 20% Discount on Your Income Tax

One of the most powerful tools in your tax arsenal is the Qualified Business Income (QBI) deduction. Most TaskRabbits operate as sole proprietors, which generally makes them eligible for this significant break. Under Section 199A, you may be able to deduct up to 20% of your qualified business income from your federal income tax. This isn't just a deduction for expenses; it's a direct reduction of your taxable income, potentially saving you thousands. It's a nuance that many gig workers overlook, so make sure you're factoring this into your year-end planning.

Maximize Your Savings with Our Advanced Calculator

If you want to stop guessing and start saving, we recommend using our Advanced Calculator. It’s built to handle the complex decisions Denver contractors face every day. For example, you can now compare the "Standard Mileage" method against "Actual Expenses" to see which yields a bigger return. While mileage is simpler, the "Actual Expenses" route allows you to factor in depreciation, which can be a game-changer if you've recently upgraded your vehicle for your business. Additionally, the calculator helps you quantify "Home Office" savings for that portion of your living space used exclusively for administrative tasks like billing and scheduling.

How Colorado Handles Gig Worker Taxes

As a resident of Colorado, you're also required to file a state income tax return. Fortunately, Colorado keeps things relatively straightforward with a flat income tax rate, which is set at 4.40% for the 2025 tax year. This means your income is taxed at the same rate regardless of whether you're a part-time mounter or a full-time handyman. The primary form you'll need to know is Form DR 0104, the Colorado Individual Income Tax Return.

Be prepared for quarterly estimated taxes: Colorado requires these payments if you expect to owe $1,000 or more in state taxes by year's end. Failing to pay these on time can result in annoying penalties. In a city like Denver, your expenses can add up fast. Whether you're paying for parking at a high-rise downtown or navigating the seasonal fluctuations of the local market, these costs are often deductible. While Denver doesn't currently impose unique city-wide income taxes on gig workers, you should stay aware of local business licensing requirements if your operations reach a significant scale. For more specific state resources, visit the Colorado Department of Revenue website at https://www.colorado.gov/revenue.

Top Tax Deductions for Denver TaskRabbits

• Standard Mileage: This is usually the go-to deduction for TaskRabbits. For 2025, the rate is 70 cents per mile. Because Denver is so spread out - with jobs often taking you from Cherry Creek to Arvada - those miles add up quickly and can drastically lower your taxable income.
• Actual Vehicle Expenses: If you drive a vehicle with high maintenance costs or heavy depreciation, you might prefer this method. It covers gas, repairs, insurance, and tires, but you must track every penny and calculate the percentage of time the vehicle is used for work.
• Tolls and Parking: While Colorado's toll roads are limited, they aren't cheap. Any tolls paid or parking fees incurred while on a job or traveling between tasks are fully deductible. Just make sure you're keeping those digital receipts.
• The Home Office Deduction: If you use a specific area of your home exclusively to manage your TaskRabbit business, you can deduct a portion of your rent or mortgage, utilities, and insurance.
• Phone and Data Plan: You can't run a TaskRabbit business without a smartphone. You're allowed to deduct the percentage of your monthly bill that represents your business use.

Expert Tip: You have to choose between the standard mileage rate and actual car expenses in the first year you use your car for business. If you choose the standard mileage rate initially, you can switch to actual expenses in later years, but the reverse isn't always true. Use our calculator to see which path is more lucrative for your specific situation.

Understanding the 15.3% Self-Employment Tax

This is often the biggest surprise for new contractors. When you're a traditional employee, your boss pays half of your Social Security and Medicare taxes. When you're the boss, you're responsible for the whole 15.3%. This applies to your net earnings over $400. While it sounds steep, remember that the employer-equivalent portion of this tax is actually deductible on your federal return, which helps soften the blow. Staying on top of your quarterly estimates is the best way to ensure this tax doesn't catch you off guard.