{"id":22,"date":"2025-06-24T15:57:58","date_gmt":"2025-06-24T15:57:58","guid":{"rendered":"https:\/\/www.rightacc.com\/blog\/?p=22"},"modified":"2025-06-24T15:58:54","modified_gmt":"2025-06-24T15:58:54","slug":"understanding-your-tax-obligations-when-starting-a-side-gig","status":"publish","type":"post","link":"https:\/\/www.rightacc.com\/blog\/2025\/06\/24\/understanding-your-tax-obligations-when-starting-a-side-gig\/","title":{"rendered":"Understanding Your Tax Obligations When Starting a Side Gig"},"content":{"rendered":"\n
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With the rise of the gig economy, more people are turning to side gigs to supplement their income. Whether you’re driving for a rideshare service, selling handmade crafts online, freelancing, or offering consulting services, earning extra money can be exciting\u2014but it also comes with tax responsibilities. Here’s what you need to know about your tax obligations when starting a side gig.<\/p>\n\n\n\n

1. You\u2019re Likely Considered Self-Employed<\/strong><\/h3>\n\n\n\n

If you\u2019re working a side gig and are not classified as an employee, the IRS generally considers you a self-employed individual. This means you’re running a business, even if it’s small or part-time, and you’re responsible for tracking your income and expenses.<\/p>\n\n\n\n

2. Reporting Income<\/strong><\/h3>\n\n\n\n

You must report all income earned from your side gig, even if you don\u2019t receive a 1099 form. Many platforms, such as Etsy, Uber, and Upwork, issue a 1099-K or 1099-NEC if you earn more than a certain amount. However, it\u2019s your responsibility to report all income<\/strong>, whether it\u2019s paid via cash, check, or digital platform.<\/p>\n\n\n\n

3. Self-Employment Tax<\/strong><\/h3>\n\n\n\n

As a self-employed individual, you\u2019re responsible for paying both the employer and employee portions of Social Security and Medicare taxes\u2014collectively known as self-employment tax. For 2024, this rate is 15.3%. You\u2019ll calculate this using Schedule SE<\/strong> and pay it in addition to your regular income tax.<\/p>\n\n\n\n

4. Quarterly Estimated Taxes<\/strong><\/h3>\n\n\n\n

If you expect to owe $1,000 or more in taxes for the year (after subtracting withholding and credits), the IRS requires you to make estimated quarterly payments<\/strong>. These are due in April, June, September, and January. Failing to pay them could result in penalties and interest.<\/p>\n\n\n\n

5. Business Expense Deductions<\/strong><\/h3>\n\n\n\n

The good news is you can deduct ordinary and necessary expenses<\/strong> related to your side gig. This might include:<\/p>\n\n\n\n