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What You Need to Know About Taxes for Your Second Job

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coins and pens stacked next to each otherMany people are unable to make ends meet with just a single job. It might be because they can only find part-time work or don’t make enough money in their full-time job, but second or side jobs are more common than you’d think. People invest their time in becoming an Uber driver, running an Airbnb, selling plasma, or even dog-sitting

When it comes to filing taxes, it can get complicated when you have multiple income sources. We’ve got a few tips to help if you’re worried about taxes for your side-gig or second job.

Making Money? You Have to Report It to the IRS


Whether you make $20 for a one time job or $5,000 during the year, legally, any income you earn should be reported when it’s time to file taxes. If you fail to do this, especially with large amounts of money, it could result in being audited by the IRS, a fine for tax evasion/fraud, or even imprisonment.

Now, it’s unlikely the IRS is going to care if you did extra chores for your Grandma and she paid you $10 one weekend, but the IRS does want to know if you are earning extra income regularly.

If you have a second job where you’re an employee (not a contractor,) all you’ll need is your W-2 for taxes. But if you are running multiple side-gigs, or selling good and services on your own, it’s your job to track your total income and report it to the IRS.

Keep Track of Your Finances
 

calculator and a paper with financial informationIf you’re earning money through side-gigs or starting your own business, you need to know exactly how much money you earned during the year.

Did you work through an independent service, like Uber or Airbnb, and earned a large amount of money during the year? You can expect to receive a 1099-tax form from them. Find out what their requirements are for providing the necessary documents and if you qualify. If not, you are on your own to track and file the income.

Here are some scenarios where you need to keep track of your income and include it in your taxes:

  • Patreon (or similar service)
  • Selling goods or services through Amazon or other websites
  • Baby/house/pet sitting on your own
  • Photography or selling artwork
  • Making and selling your own music
  • Anything that earns you regular income
  • Anything that earned you a large amount of money

Basically, any work where you are earning money outside of registered employment, you’ll need to track and report.

Deductions, Business Expenses, and Knowing What Qualifies
 

Some work requires you to use your own resources, like driving your own car or taking photos with your own camera. When using your materials or money for business purposes, keep track of it so you can claim the amount as deductions on your taxes.

New tools, supplies, and even gas to get from one job to the next can be written off on your tax forms. However, it is essential that if you claim a deduction, you have proof of it. For example, if you drive you car a lot for business, you must track the miles you travel specifically for work purposes and keep all gas and repair receipts. You’ll need them to prove you purchased these for work purposes if you are audited by the IRS.

Deductions and businesses expenses can get complicated quickly, so don’t hesitate to consult a professional for help if you need it.

Prepare for Larger Tax Duties
 

hands holding a large ball of $100 billsUnless you are a hired employee for a business, the income you earn during the year will be considered like you are an independent contractor or business owner. In a registered company, the business pays their part of the income tax, and the employee pays the other. But if you are earning money on your own, you will be expect to pay both parts.

That means on income you earn on your own, you’ll be responsible for paying the 15.3% self-employment tax, depending on how much you earn. If you earned a substantial amount of money through your side-gig, you might have to pay a substantial amount of taxes - unless you’ve been paying them quarterly.

You Don’t Have to Do Taxes on Your Own
 

Taxes can be complicated, but you don’t have to do them alone. Whether you need somebody to help gather up financial records, want a little guidance, or could use a discount on TurboTax software, Pioneer is ready to help. There are tools available that can make the daunting task of filing taxes a lot easier, so use them for your benefit!

Save Money on Turbo Tax through Pioneer

 

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