If I have a job and freelance on the side, how is that taxed?

July 2, 2022

First things first: any income you earn from freelance work needs to be reported when you file your taxes. If you make more than $600 from a single client, they should give you a 1099 form. This will show how much they paid you so that you can file accordingly.

Even if you don't get a 1099, you still have to report the income..

If you have any expenses for your freelance work, you can deduct them to lower your taxable income. Some of these may include:

  • Computer & softwares
  • Courses & communities
  • Home office supplies
  • Self-employment tax

Also read: 17 important tax deductions for freelancers

But if you have a 9-5 and you freelance on the side, the overall tax filing process should be relatively straightforward.

For example, let's say you made $70,000 from your job and $20,000 from freelance work. The $70k would be reported on IRS Form 1040 and the $20,000 would be reported on IRS Form 1040 - Schedule C.

Before deductions, your income would be $90,000. Then, how you choose to categorize expenses and finalize deductions will influence how much your final tax bill is.

Remember: no taxes are withheld from self-employed income so you must set aside the appropriate percentage for your tax bracket (typically 20-30%).

Also, even if you aren't structured as a business, income you earn on the side is considered "self-employment income" and you would be considered a sole proprietor.

Taxes are confusing as it is and two different types of income can make it more challenging, so I highly recommend working with a tax professional to make sure that you aren't leaving money on the table.

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Disclaimer: This should should be viewed as "education-only" and for legal purposes, this should not be considered investment, tax, or legal advice.

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