Side Gigs
(Continued)
You might need to file a Schedule C. A Schedule C is where sole proprietors (the business classification of the majority of side hustlers) report their business income and expenses. You might be able to use the simpler Schedule C-EZ if you spent less than $5,000 in business expenses. If you must face completing a Schedule C, it’s not a bad idea to invest in advanced tax software or a professional tax preparer.
Get ready to pay self-employment tax. Usually, an employee and their employer split the income tax bill, with each paying half. Self-employed people or those with consistent side-gig income must pay it all. That means a 12.4 percent Social Security tax and a 2.9 percent Medicare tax on net earnings plus any applicable state income tax.
You could get a new tax deduction. You can deduct certain business expenses from your self-employment income, reducing the amount of your taxable income and lowering your tax bill. You may qualify for a deduction of up to 20 percent of your side gig income.
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