Tax Considerations for Side Hustles Don’t Stress Even if this is your first time dealing with 1099 income, it’s manageable.

Consider filing an extension if needed.

Income Report all income on Schedule C, even if you don’t receive a 1099.

Deduct business expenses to reduce taxable income.

Entities LLCs do not save on taxes; they are pass-through entities.

S corporations may provide tax savings.

Expenses Identify deductible expenses related to your side hustle, such as: Home office Auto mileage Cell phone Equipment Dining Travel Training Paying your children for帮忙 Self-Employment Tax You’ll pay both the employee and employer portion of Medicare and Social Security taxes on income reported on Schedule C. Consider strategies like S corporations to reduce this tax burden.

Creativity Think creatively to find more deductible expenses.

Examples include dog food for property guard dogs, cat expenses for pest control, snowmobiles for property access, and clothing with logos.

Anything incurred to directly or indirectly support your business is potentially deductible.

Engagement Get actively involved in the tax planning process.

Control who gets your income by minimizing taxes paid to the IRS.

Consider solo 401k and HSA contributions for further tax savings.

Additional Tips Separate bank accounts for your side hustle.

Document all expenses thoroughly.

Get help from a tax advisor or tax pro network for guidance.

Don’t forget about the Business Owner Information Form (Form 1096).

Understanding Income Reporting and Expense Deductions

– Report all income on Schedule C, regardless of receiving a 1099.

– Deduct business expenses, such as home office, auto mileage, and equipment, to reduce taxable income.

Exploring Tax-Saving Strategies

– LLCs do not provide tax savings as they are pass-through entities.

– Consider S corporations or other strategies to potentially reduce self-employment tax burden.

Maximizing Deductible Expenses and Engaging in Tax Planning

– Identify creative deductible expenses like dog food for guard dogs or snowmobiles for property access.

– Actively participate in tax planning by exploring retirement contributions and utilizing tax advisors for guidance.