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Are you reporting your side job?

Side jobs are a part of life these days. Some people use them to explore their interests and passions, while others use them primarily for the social aspect. And some use them purely for financial reasons, either to help make ends meet or for extra spending money.

The jobs themselves are as diverse as the people working them. Harrison gigs as a drummer, Danielle works in a bar, Alex drives for Uber on weekends, Allan works for Target one morning a week, Cassie teaches a fitness class, Marcos coaches soccer and Jen designs Snapchat filters that she sells on Etsy.

The side hustle economy

The concept of a side hustle is a simple one. With a side hustle, you earn money without quitting your job (that’s why it’s called a side hustle). This is the entrepreneur-style side job that gives you freedom and security and an alternative income stream. But a side hustle is more than a part-time job where you trade time for money. It’s about creating an income source through providing services and products like other businesses, but this time you’re the boss.

Paying taxes on the side income?

According to a report, more than one in four in the U.S. are using a side gig or hustle for a tax-free income. The report found that Millennials are the worst (33.3 percent) for not declaring their extra income, with Generation X next at 26 percent and even baby boomers are getting into the act with 16.6 percent.

It’s not just the lower tax brackets either

More than any other income bracket, 36 percent of those earning incomes of $150,000 to $300,000 fail to claim their side income.

The tax man awaits

Side income is still required to be reported to the IRS alongside your everyday income. Careful record keeping can help when you’re being audited as well as avoiding a tax evasion charge.

A qualified tax attorney can advise you on how best to save on taxes and limit your risk as you set up your side business.

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