AI training income & taxes (1099)

The basics

When you earn on DataAnnotation, Outlier, Mercor, micro1, Alignerr, Handshake AI, or AfterQuery, you are not an employee. You're an independent contractor. Three things follow from that:

• You'll likely get 1099s. Platforms typically send a 1099-NEC (or 1099-K) once your earnings cross their reporting threshold.
• You owe self-employment tax. Social Security and Medicare — roughly 15.3% — on top of your regular income tax. That part surprises people every year.
• You probably owe quarterly estimated payments. Nobody withholds for you. If you wait until April, you may owe penalties on top of the bill.

Keep records — they do double duty

I screenshot every payout dashboard. Two reasons: they're the receipts I show on this site, and they double as my income record when a 1099 doesn't match what I actually received. If a platform's form is wrong — and it happens — your own records are the thing that saves you.

Not tax advice

I'm not an accountant, and none of this is tax advice. Thresholds move, rules change, and your state may tax all of it differently. Before you file, talk to an actual accountant who works with 1099 income.