Guides / Taxes and paperwork
Taxes on side income: the basics
Self-employment tax, income tax and what you can deduct.
Side income is taxable, whether or not you receive a tax form. If you're an independent contractor, no one withholds tax for you, so planning ahead avoids a painful bill.
Two taxes
- Income tax, at your regular rate
- Self-employment tax for Social Security and Medicare, about 15.3% on most of your net self-employment earnings, once they pass a small threshold
Deductible business costs
- Business mileage or actual vehicle costs
- Supplies and equipment
- Platform and payment fees
- The business share of your phone and internet
- Some home office costs, if you qualify
How much to set aside
Many people set aside 25 to 30% of their net side income for taxes. The right amount depends on your total income; a tax professional or the IRS withholding and estimated tax tools can help.
General information, not tax advice. Rules and thresholds change; check IRS.gov or a tax professional. Penny Boosters isn't paid by any gig app or platform.