The financial world has shifted massively over the past 10 years. We all know it.
One of the main shifts has been the incredible (and ongoing) rise in self-employment among Americans.
There are so many great tax reasons to have your own business, even if it’s a “side hustle” as the saying goes.
And today we want to clear some of the fog around this topic, especially for your wallet — and your taxes.
Pronto Income Tax Team’s
“Real World” Personal Strategy Note
Tax-Smart Ways to Be Side Hustle Savvy
“The struggle you’re in today is developing the strength you need for tomorrow. Don’t give up.” -Robert Tew
Despite having full-time employment, many Americans need some sort of work on the side to supplement month-to-month living expenses. In fact, a recent MarketWatch survey says one-third (!) of Americans depend on a side hustle.
Do you (or someone you know) fall into that category?
If so, we’re here to help you figure out the (multiple) tax ramifications for self-employment.
Whether it’s you or someone you know, we love to come alongside any endeavor that helps pay the bills. There’s no reason that tax questions and problems should hinder all that hustling.
Here are a few tax tips, whether you (or someone you know) are in the middle of a side hustle or thinking about starting one, that will help keep your taxes in order.
Research and Report
There are a few basic differences between W2 and 1099 employees. And if you’re doing some freelance work for another business, they’re not required by the IRS to send you a 1099 unless they’ve paid you $600 or more. HOWEVER, even if you earned less than that, with no documentation required, your money is still taxable income.
If you are earning money on the side, you are still responsible for keeping track of and reporting all earnings, just like any other “full blown” business.
By Tax Day, you’ll need to report all earnings, with or without a 1099, to the IRS.
Many freelancers end up filing Schedule C as sole proprietors. You and I can tackle this document together, but it’s imperative your numbers are accurate for filling out each box.
A side hustle is just that: a hustle.
But these gigs aren’t as simple as a childhood lemonade stand. That ice-cold cash is (sadly) not all yours. Unfortunately, this is taxable income we’re talking about and it’s vital to pay those estimated taxes…
…four times a year (April 15, June 15, Sept. 15 and Jan. 15). That’s right, things like self-employment taxes are required from all the strenuous (but fun!) work you complete throughout the year.
But don’t get discouraged! This is another part of the hustle, yet it has to be accurate for continued success. Just one more reason we’re in your corner all year round.
Stay Healthy. Stay Hungry.
The IRS also wants to help the self-employed in regard to health insurance and retirement benefits. Those contributions can be deducted, but are filed on your personal tax return as an adjustment to personal income.
Now, I can help you with any of the aforementioned items. We know the tax side of self-employment can seem like a lot, but there are many benefits of self-employment if you can make it through tasks like filing your taxes.
No one should have to hustle alone, for it can quickly lead to burnout.
You need a team around you. For thousands of self-employed clients, we are a part of their team. If you or someone you know needs a trusted teammate in the side hustle journey, please keep us in mind, we are ready and willing to hustle right alongside you.
Pronto Income Tax Team
Pronto Income Tax Team