Over 10 million Americans have side jobs, which they believe can be very helpful in achieving financial freedom, have more to spend, pay up debts, pay for a vacation and many more. For taxpayers with side jobs it can be very complex to file your tax, most especially if you’ve been reporting single source of income. below are the few tips that can help you in preparing your tax against the next tax return.
Your post tax earning is determined by your monthly salary, because your employer will have deducted the right amount of taxes for the IRS purpose. One of the greatest advantages of side jobs/hustles is that you be will responsible for paying your taxes as regards the earnings you make yourself. If perhaps you didn’t pay the IRS estimated taxes throughout 2018, you will have to pay them up this year because you already owe the IRS.
Funny you can never be too smart with the IRS because if you underpay your taxes on too many occasions, you might be struck with a penalty. Irrespective of how little your side job pays you, a good tax consultant will always advise you to pay your tax quarterly so you can avoid trouble with the IRS.
It is very beneficial to have a side job so as to increase your monthly income, so as to achieve your dreams. You should also know that there are tax implications involved in your side jobs.
We all have come to accept that for all your earnings, from bank interest, jobs, investments, the IRS always gets a share of the cake no matter how little it may be.
It is always advised to report all the earnings you get from your side jobs to the IRS, no matter how small it may be.
You can get a 1099 form, electronically or via mail, for all the company that paid you above $500 last year. The IRS will keep a copy of each 1099 that was issued to you for record.
If the IRS notice any anomaly in your return, maybe you didn’t include some of your income, then I must say the IRS will have to audit your tax.
Note because you didn’t get a 1099 form doesn’t mean you shouldn’t report the incomes generated from your side jobs.
Sometimes you might need money from your salary to finance your side hustles. The IRS are aware about this as well, that is why they allow taxpayers to deduct any expenses or miscellaneous incurred on your tax return, which lowers your tax burden.
You should determine the differences between all your expenses. There are majorly two type of expenses.
The nature of your job, determines if it might be deducted from your tax or not. Although you can deduct purchase of supplies or equipment’s that are relative to your job. For instance, your designed a website for a client and you had to buy a router and power cable for your computer, the cost are deductible. If you sold some of your hand made bracelets or chains, your pearls or stones supplies are deductible as well
The commonest deductible expenses also include:
If you don’t know what miscellaneous you are allowed to deduct from your side hustle, you can consult a tax preparer/consultant, so you can enjoy all the tax benefits you are entitled to.
YourIRSTaxAdvocate.com