Taxes on Side Hustle Income

Introduction

Earning money from a side hustle like babysitting, tutoring, reselling, or freelancing is exciting. But side hustle income often comes with tax responsibilities that many people do not realize.

Is Side Hustle Income Taxable?

In the United States, most income is taxable, including money from side hustles. If you earn more than a certain amount from self-employment in a year, you generally need to file a tax return and may owe self-employment tax, which covers Social Security and Medicare.

Self-Employment Tax

When you work for an employer, they pay part of your Social Security and Medicare taxes. When you are self-employed, you pay both parts. Self-employment tax is about 15.3% of net earnings, in addition to regular income tax.

Stay Prepared

Keep records of your income and expenses throughout the year. Business expenses, like supplies or mileage, may reduce your taxable income. Setting aside 20% to 30% of side hustle earnings for taxes can help avoid a surprise bill. Consider asking a tax professional for help.

Conclusion

Understanding taxes on side hustle income helps you keep more of what you earn and avoid problems later!