Are you earning extra money from a side hustle or considering starting one soon? If so, it’s important to understand how to file your taxes for this additional income. In this article, we’ll cover everything you need to know about filing taxes for your side hustle, including how to use the 1040EZ or 1040A forms, hiring an accountant, and reporting your income and expenses.
When you have a side hustle in addition to your full-time job, you’ll need to pay self-employment tax on your side hustle income. This tax is in addition to the taxes you pay on your full-time job, and it covers your social security and medicare contributions. To pay self-employment tax, you’ll need to file a Schedule C and report your income and expenses. You can deduct expenses related to your side hustle, such as travel, equipment, and supplies. This will help reduce your overall tax burden and ensure that you’re only paying taxes on your net income.
If you’re unsure about how to file your taxes for your side hustle, consider consulting with an accountant who specializes in taxes for people with multiple sources of income. They can help you navigate the process and ensure that you’re taking advantage of all the deductions and credits available to you.
One of the most important things to remember when filing taxes for your side hustle is to keep track of your income and expenses throughout the year. This will make the tax filing process much easier when April 15th rolls around. Be sure to keep receipts and records of all your income and expenses, as you’ll need these to accurately report your income and deductions on your tax return.
If you’re using tax software like TurboTax, it will ask about any self-employed businesses during the initial interview process. This can help you quickly and easily file your taxes, but it’s important to make sure that you’re accurately reporting all your income and expenses. If you’re not using tax software or want some extra help, consider hiring an accountant or financial advisor who specialized in taxes. They can review your tax return and ensure that you’re taking advantage of all the deductions and credits that you’re entitled to. Additionally, if you have any complicated tax situations, such as multiple sources of income or owning a small business, an accountant or financial advisor can help you navigate these complexities and ensure that you’re complying with all relevant tax laws. Overall, having professional assistance can help you feel confident that you’re filing your taxes correctly and taking care of your financial obligations as a side hustler.
There are a few other things to keep in mind when it comes to filing taxes for your side hustle. First, if you made more than $400 in self-employment income, you’ll need to file a Schedule C. This is a form that allows you to report your business income and expenses, and it’s an important part of the tax filing process for side hustlers.
Next, it’s important to understand the difference between a hobby and a business. If you’re earning money from your side hustle, the IRS may consider it a business, which means you’ll need to pay self-employment tax on your earnings. However, if your side hustle is more of a hobby, you may not need to pay self-employment tax. The key here is to show that you’re earning money from your side hustle with the intention of making a profit.
Another thing to consider is the tax deductions you may be eligible for as a side hustler. This can include things like home office expenses, travel expenses, and business-related supplies. Be sure to keep track of these expenses throughout the year, as they can help reduce your tax liability when it comes time to file.
Finally, it’s important to stay organized when it comes to your side hustle taxes. This means keeping track of all your income and expenses, and keeping receipts and other documentation in a safe place. If you’re not sure how to file your taxes for your side hustle, consider hiring an accountant or financial advisor who specializes in taxes for people with multiple sources of income. They can help you navigate the tax filing process and ensure that you’re paying the correct amount of tax on your side hustle income.
