6 Last-Minute Steps To Take Before Filing Your Side Hustle Taxes
Written by
Paige Cerulli
Edited by
Angela Corry
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If you worked a side gig in 2024 and haven’t filed your taxes yet, you need to put time aside right now and work on them as Tax Day is upon you.
Whether you drove for Uber or Lyft to earn money to supplement a full-time job or struck out on your own as a freelancer, that side hustle that brought you extra cash can also put you in a financial pickle when it comes time to file on April 15, 2025. Filing your taxes can get more complicated when freelance income is involved for both your state and federal tax returns.
Fortunately, there are several ways you can prepare to file to get your income and documents organized in a hurry to make filing your taxes last-minute a smoother and less stressful process.
Document Your Income
If didn’t do so throughout tax year 2024, now is the time to sit down and thoroughly document your income to ensure the individual income taxes you file will avoid IRS issues. Al-Nesha Jones, Intuit Top Accountant and Forbes recognized CPA, founded the ASE Group to help small business owners thrive. She recommended that individuals with a side hustle summarize all of the income they earned, no matter how they were paid.
“Consider summarizing your income by payment method,” she suggested. “Since not all payment methods require the issuance of 1099-NEC, 1099-NEC and/or 1099-K forms, you can’t rely on those to reflect all of the income earned. But if you’re tracking your income by payment method and client, you’ll be able to easily cross-reference the info reported on these forms to ensure it’s not overstated and requiring a correction.”
To help you keep up with your income documentation, Jones recommended keeping the system as simple as possible.
“The key is to pick a system and a rhythm that works for you,” she said. “Doing this regularly — say, 30 to 60 minutes per week — is much easier than panicking at the end of the year, rushing to pull everything together, and risking inaccurately reporting your income or expenses.”
Jones recommended using QuickBooks Online, since it organizes data so that it’s simple and accessible, and it also integrates seamlessly with tax software. But, if you’re brand new to the gig economy, you can also use Excel or Google Sheets to track and organize your income.
Additionally, Jones stressed the importance of depositing side hustle income into a bank account that’s solely for business.
“The key here is to not commingle funds — keep your personal finances entirely separate from the business’s finances,” she explained. “This is not only one of the marks of a strong business, but it creates clear division between you and your business (your attorney and accountant will thank you), and it simplifies tracking since only business-related activity flows through the account.”
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Gather Your Essential Documents
There’s no more time to waste — get your essential federal, state and local tax documents organized. Ben Watson, a certified public accountant and CFO at DollarSprout, recommended that anyone with side hustle income gather their income and expenses, including bank statements, invoices and receipts to help you both pay on time and maybe even boost your expected refund amount.
Additionally, check with your clients to make sure that you receive any 1099s that they generate. Watson explains that you’ll typically receive a 1099 from any client you earned more than $600 from during the year, and you were paid in cash, check, or ACH bank deposits.
“Payments through processors like PayPal, Venmo and Stripe don’t generate 1099s until you’ve earned much more in a calendar year,” he explained.
Organize Your Expenses
Your self-employment expenses are deductible and can help minimize the taxes you owe and can affect whether you receive a refund. Spend time organizing those expenses so they’re easy to report on your taxes and to access if you’re ever audited.
Jones recommended developing a system to organize receipts, such as scanning, saving, and uploading them to a cloud drive for storage. The IRS Form Schedule C provides a starting point to help you organize your expenses into categories for simplified tax return data entry.
If you use your personal vehicle for your side hustle and want to deduct those expenses, you’ll need to maintain a mileage log of the miles you drive for business purposes.
“This is required whether you take the standard mileage deduction or actual expense deduction for personal vehicle use since you’ll need those figures to calculate the business use percentage of your vehicle,” explained Jones.
Prepare To Pay More in Taxes
The first time you pay taxes on your self-employment income, you may notice that your taxes are much higher. Jones explained that when you’re self-employed, you pay self-employment tax, which is Social Security and Medicare tax, on your net income, as well as your standard income tax.
“Federal income tax could range from 10% to 37%,” she explained. “State income tax depends on your state, but could be as low as 0% or as high as 10% or more. Self-employment tax, the employer and employee portions of Social Security and Medicare taxes, is 15.3%.”
That means it’s important to set aside part of your side hustle income for taxes. A general rule of thumb is to set aside 30% of self-employment incomes, but that’s just an estimate. It doesn’t take into account deductions or your Federal or state income tax rates. “While this very rough estimate could result in an overpayment or underpayment, it tends to avoid having a large remaining tax bill after estimates have been paid,” explained Jones.
If you haven’t been setting aside enough money for taxes, filing your taxes early will help you determine just what you owe. It also gives you a few months to save up before you need to make that tax payment. You may also need to explore arranging a payment plan with the IRS if you’re struggling to come up with the full tax payment.
Plan To Pay Estimated Taxes
According to the IRS, you’ll generally have to pay estimated taxes if you expect to owe $1,000 or more in taxes when you file your return. By paying four estimated tax payments throughout the year, you can avoid being charged penalties or filing fees for tax underpayment. These estimated taxes also help you avoid owing a large amount of money at the end of the year and having to scramble to pay your taxes.
“As a very broad rule of thumb, paying 30% of your net income will cover the tax liability for your self-employment tax as well as your increase in regular income tax,” Watson explained.
Jones explained that you can use the IRS Estimated Tax for Individuals Worksheet, form 1040-ES, to calculate and [pay your estimated tax for the year. A tax professional can also help you calculate your estimated payments.
Connect With a Tax Professional
Whether you are planning to electronically file last minute or have an expert accountant on call for legal advice, you want to make sure you have all of your ducks in a row. Filing your taxes when you have a side hustle is more complicated than filing taxes as an employee, but it’s not impossible to navigate yourself either.
If you have questions or want to ensure the process goes as smoothly as possible, a tax professional can help. Jones recommended reaching out to tax professionals as early as possible, and highlighted the importance of finding someone who specializes in self-employment income.
“Schedule time to discuss your situation and concerns with them, and also set aside time to tidy up your bookkeeping,” she explained. “Rushing through it under pressure can lead to mistakes and potential amendments later.”
Caitlyn Moorhead contributed to the reporting for this article.
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