Side Hustle Taxes – A Simple Guide

A lot of people are getting side jobs to make extra money or follow their interests. But what about the tax effects of having a side job? 

If you are in Jefferson County, WI, and need help with your side business taxes, you might want to think about getting professional business tax preparation Jefferson County, WI, to make sure you get the most out of your benefits and pay the least amount of tax possible. Do not worry about taxes when you have a side job. This guide will help you keep more of your hard-earned money. 

Set aside money for taxes. 

Making tax plans is a very important thing that you can do. Since taxes are not taken out of hustle income like they are from a regular paycheck, you have to pay projected taxes all year long. 

Divide your side job income into twenty to thirty-five percent chunks and set them away. This will help you pay your federal and self-employment taxes. This will keep you from getting a big tax bill when it is time to file. 

Estimated tax payments. 

You have to pay estimated taxes every three months if you think you will owe more than $1,000 in taxes after deductions. This way, you will not get a big tax bill at the end of the year but instead pay less each month. Around April 15, June 15, September 15, and January 15 of the following year are the expected tax due dates. 

Track your expenses. 

For tax reasons, it is important to keep good records of the money you make and spend from your side job. This will help you get tax breaks that can lower your bill. You can subtract costs for things like business materials, your home office, marketing, and tools that you use for your side job. 

Tax forms you might need to file. 

You will need to fill out a different form to report your side job pay when you file your taxes. The form you need to file will depend on how your business is set up. In short, here is what it means:

• Sole proprietorship: As a sole owner, you will list your side business income and costs on Schedule C of your Form 1040 if you are one.
• Partnership: If you work with someone else, you will need to use Form 1065 to report your side job cash and costs.
• Corporation: You will need to file Form 1120 for your business on its own if you have incorporated your side job. 

Take advantage of tax deductions. 

People who work extra jobs can get a lot of tax breaks. Most people have these:

• Business costs: As we already said, you can subtract normal and necessary business costs that are linked to your side job. This can include things like tools, office materials, trip costs, and money spent on marketing.
• Home office deduction: If you set aside a room in your house for your side business, you might be able to write off some of the costs of running your home office.
• Costs of health insurance: If you are self-employed, you can remove the cost of your health insurance from your tax return. 

Taxes you might need to pay. 

Besides paying income tax, you might also have to pay self-employment tax. Medicare and Social Security are paid for by this tax. At the moment, the tax rate for people who work for themselves is 15.3%. This is made up of a 12.4% Social Security tax and a 2.9% Medicare tax. 

To make sure your taxes are filed correctly, talk to a tax expert about benefits and tax tactics. For easier tax time, keep good records of your side job income and spending all year long. 

Even if you can not pay the whole bill, you should still file your taxes on time to avoid fines and interest. These tips will help you save money and have a better tax season.