Filing taxes with multiple sources of income from side gigs

Side employment, also known as side gigs, can help make ends meet, pursue passions, or gain new skills. With the increasing number of people taking on a side hustle, gig economy taxes are a topic that’s relevant to many taxpayers.

With new or multiple sources of income, you could have extra tax reporting responsibilities. Follow along as we guide you through filing taxes as self-employed or with multiple side hustles.

Do I have to pay taxes on income from gig jobs?

Yes, you generally pay self-employment taxes on side gig income when you work as an independent contractor. Whether you’re a rideshare driver, crafter, freelance graphic designer, or otherwise, gig job dollars count as taxable income for U.S. federal income tax purposes.

Common gig job related tax forms

If you have one or multiple sources of income, there are additional tax forms and schedules you’ll need to get to know.

If you expect to owe $1,000 or more in taxes from your side gig, you need to use Form 1040-ES to determine your quarterly tax payments.

Generally, independent contractor taxes or freelance taxes involve one or both of these informational returns:

• Form 1099-NEC: This form reports nonemployee compensation paid to an independent contractor for freelance jobs, as well as fees, commissions, or other compensation paid by a business to a non-W-2 employee.
• Form 1099-K: This form reports card payments and transactions processed by online platforms, apps, or payment card processors.

The payors and processors send these forms to the IRS to report income paid for independent contractor work or for payments processed by the end of January. They also send a copy to you. The forms and your reported income are then matched as your tax return is processed.

Additional schedules

In addition to the 1099 forms, you’ll use these Schedules for your side employment income:

• Schedule C: Use this schedule to report your business income and expenses. You’ll file this schedule with your Form 1040 tax return for each business.
• Schedule E: Use this schedule to report rental income and royalties from property if your side job involves renting or selling real estate.
• Schedule SE: Because your employer doesn’t withhold self-employment taxes for your side gig and self-employed activities, you’ll need to pay self-employment tax on your side gigs on your own, if you earn more than $400 in a year in self-employment income. Schedule SE calculates and reports how much tax to pay. Self-employment tax covers your Social Security and Medicare contributions, or FICA tax, which are 15.3%. (For W-2 wage earners, the rate is 7.65% and the employer pays the other 7.65%.)

The information on these Schedules will flow to your individual tax return, IRS Form 1040.

How to report side hustle income from multiple side jobs

It’s important to understand how to report side job income to stay on top of your taxes.

When you accurately report all income—including gig jobs—you’ll avoid potential headaches and even penalties and fines. Stay on top of freelance taxes by learning how to file taxes as a gig worker or with multiple income streams:

1. Determine if you need to file a return: If your self employment net earning exceed $400, you must file a tax return and pay self-employment tax.
2. Collect tax forms: Collect the 1099 forms—like 1099-Ks and 1099-NECs—each payor or processor sends. Collect form W-2 if applicable.
3. Add up your income: Sum the total earnings from all jobs.
4. Calculate your net earnings: Lower your taxable income by deducting business-related expenses using Schedule C. Take your total income and subtract expenses to arrive at your net earnings. Then multiply that number by 92.35% to find out what’s taxed for Social Security and Medicare, or self-employment tax.
5. Deduct half your self-employment: You can subtract half of your self-employment tax from your total income. This helps lower the amount you pay in taxes.
6. File your taxes: Complete IRS forms Schedule SE to determine if you owe quarterly estimated taxes. File your annual income taxes using Form 1040. Make sure to attach any associated Schedules to your return.

If managing multiple income streams feels overwhelming, get help.

Making quarterly estimated tax payments

Avoid IRS underpayment penalties and manage your gig’s cash flow more effectively by paying quarterly. File estimated tax payments quarterly via Form 1040-ES if you:

• Expect to owe $1,000 or more in taxes for the current tax year
• Your withholding and refundable credits are less than 90% of the tax for the current tax year, or 100% of the tax for the previous tax year

Tax deductions for side gigs

Working for yourself comes with extra responsibilities, but you also have the option to take special gig work tax deductions that aren’t available to most individuals. These deductions help lower your taxable income, so you owe less federal tax. They may even help lower your tax bracket.

These self-employed tax deductions can help you save on your tax bill:

• Self-employed retirement plans: Individual retirement accounts like SEP IRAs allow self-employed individuals to make tax-deductible contributions toward their retirement, reducing taxable income while saving for the future.
• Home office deduction: If you use part of your home exclusively for business, you may deduct related expenses such as rent, utilities, and maintenance.
• Mileage tax deduction: Business-related driving can be deducted using the IRS standard mileage rate or actual expenses, helping offset vehicle costs.
• Health insurance premiums: Self-employed individuals may deduct premiums paid for medical, dental, and long-term care insurance for themselves and their families.
• Start-up costs: What you spend on launching a business, like market research or incorporation fees, can be deducted up to a certain limit in the first year of operation.
• Professional supplies: Items necessary for running your business—such as software or office supplies—are deductible as business expenses.
• Legal and professional fees: Fees paid to attorneys, accountants, or consultants for business-related services are generally tax-deductible.
• Taxes and licenses: Business-related taxes and licensing fees, such as state permits or regulatory costs, can be deducted as operating expenses.

Get help from H&R Block to report side employment income

Taxes get more complex the more income sources you have. For this reason, it’s important to get help. With H&R Block on your side, you can feel confident.

Have a side business? Take control of your taxes and get every credit and deduction you deserve. File with H&R Block Online Deluxe (if you have no expenses) or H&R Block Self-Employed Online (if you have expenses).

Have questions about deductions and other small business tax issues? Rely on our team of small business certified tax pros to get your taxes right and keep your business on track. Find out how Block Advisors can help with your small business taxes.

Our small business tax professional certification is awarded by Block Advisors, a part of H&R Block, based upon successful completion of proprietary training. Our Block Advisors small business services are available at participating Block Advisors and H&R Block offices nationwide.