September 8, 2022
How do I report extra income for my side hustle?
The gig economy is officially in full swing. Even if you have a full-time job, it’s increasingly common to also have a freelance source of income on the side.
Any income you receive needs to be reported to the IRS, but with gig work, reporting can sometimes become a bit more complicated to figure out. Should your gig work be classified under Self-Employment or Other Income on your form 1040?
Definition of self-employment
The IRS considers you to be self-employed if both of the following are true:
- Your primary motivation in doing the side gig is to make a profit – regardless of whether or not that actually happens
- The independent work you do occurs on a regular, frequent, or continuous basis
If either of the above conditions is not met, then you should claim your work as Other Income.
Sometimes, you may do work for which you receive payment in kind – i.e., property, goods, or services in exchange for your work – rather than money. It’s worth noting that such income still needs to be reported to the IRS.
If you are doing freelance work for which you receive more than $600 from the contracting company, then you should receive a 1099-MISC form from them, which you’ll need for your tax filings. If you do not receive this by January 31, then it can be worth reaching out to the contracting company to inquire about its status.
Tax filing for income outside of the standard W-2 employment can be more complicated, but an understanding of the reporting requirements can make it more manageable.