More than likely, you will have to report your side hustle to the government because the government wants its cut! In the US, if you make more than $400, you are obligated to report that income to the government.
Will government find out if you don’t report?
If you earned your money in cash then more than likely, the government will not find out, but if you were to deposit that amount, the bank reports how much money you have in your bank to the IRS, and if the amount is large, the IRS might want to audit you.
There are a few things you need to do to make sure you’re reporting your side hustle income correctly.
1. Keep track of your income and expenses
This is important for two reasons. First, you need to know how much money you’re making (and losing) from your side hustle. Second, you need to have documentation to back up your income and expenses when you file your taxes. There are a few ways you can keep track of your income and expenses. You can use a spreadsheet, accounting software like QuickBooks, or even a simple notebook.
2. Report your income on your tax return
When you file your taxes, you’ll need to report your side hustle income on your tax return. This is usually done on Schedule C (or Schedule C-EZ if your business is simple and you don’t have many expenses).
3. Pay taxes on your income
If you’re making a profit from your side hustle, you’ll need to pay taxes on that income. The tax rate will depend on your income and filing status, but it’s typically between 10% and 37%.
4. File a quarterly tax return (if applicable)
If you’re self-employed or have a side hustle that makes more than $400 per year, you’ll need to file a quarterly tax return. This is a form that you file four times a year (January, April, July, and October) to pay taxes on your income. 5. Keep good records It’s important to keep good records of your side hustle income and expenses. This will help you if you’re ever audited by the IRS.