How Does a Side Hustle Affect Taxes?

Side hustle income is taxable — even if you don't receive a 1099. You'll report it on Schedule C and owe both income tax and self-employment tax (15.3%) on your net profit. If you expect to owe $1,000 or more in taxes from your side income, make quarterly estimated payments to avoid penalties. The good news: you can deduct legitimate business expenses like supplies, software, and a portion of your phone or internet costs. Keeping a separate bank account for side income makes tracking much easier.