5 Tax Moves Side Hustlers Wish They'd Learned Sooner
Every year, you get a little better at running your side hustle. Your marketing slogans are catchier. Your client list grows longer. You find smarter ways to integrate your side business with your full-time job.
One thing remains tricky: filing your taxes. There are things you probably wish you’d learned sooner.
Why not learn them now? To lend a hand to our enterprising, side-hustling readers, MoneyLion researched the tax moves freelancers regret not knowing before heading into yet another tax season.
1. You Owe Taxes — Even if It’s a Hobby Turned Hustle
You started dog walking through a service like Rover to get some exercise and enjoy puppy cuddles. What began as a hobby is now a bona fide side hustle. Still, you don’t work that much or make a ton of money, so you probably won’t be taxed — right?
Explore More: 10 Tax Loopholes That Could Save You Thousands
Learn How: This One Low-Effort Money Move Could Change Your Finances in 2026
Wrong. If you’re running your side hustle to make a profit, the IRS generally considers that activity a business — and you’re expected to report the income.
Don’t believe us? The IRS explains:
“Whether someone is having fun with a hobby or running a business, if they are paid through payment apps for goods and services during the year, they may receive an IRS Form 1099-K for those transactions. These payments are taxable income and must be reported on federal tax returns.”
Even if you don't receive a Form 1099-K, you're still required to report all taxable income. In other words, once money starts coming in, the IRS expects its share.
2. You Can Keep Track of Your Receipts Digitally
As a freelancer, you need to keep track of receipts to claim those sweet deductions. But let’s be real — you’re not great at saving documents. Those receipts are about to disappear into the void of your junk drawer.
Writer Bernadette Joy understands the scramble. In a piece for CNET, she describes digging through drawers and boxes at tax time before switching to a more efficient digital system.
“Nowadays, I take a picture of each expense and email myself all of the receipts,” she wrote. “Then I save them in a folder in my inbox so I can throw the paper receipts away.”
It’s simple. The IRS accepts digital copies of receipts as long as they are accurate and legible. And if you’re working with a tax preparer, you can forward a master file with everything in one place.
3. Even Small Business Expenses Can Be Deducted
When Joy attended certain business events, she’d stop at a dollar store for necessary items. Though she bought them expressly for her business, she assumed the purchases were too small to matter — and missed out on deductions that could have saved her money.
“Never underestimate how quickly small business expenses can add up to big tax savings. It's easy to discard small expenses as unimportant,” she wrote. “But if you have a few tiny expenses each week or month, you might find there's a more substantial amount to write off come tax time.”
Every little bit helps lower your tax liability. Ordinary and necessary expenses tied to running your business — no matter how small — can generally be deducted. After nearly a decade as an entrepreneur, Joy estimates she could have saved hundreds of dollars by deducting those seemingly minor expenses.
4. Recognize That You Pay Two Kinds of Taxes
When Danielle Flores, freelance writer and voice behind the I Like to Dabble blog, started her side hustle, she was terrified of paying taxes. Over time, she learned key lessons that eased her fears. Chief among them: Freelancers pay two kinds of taxes — self-employment tax and income tax.
“Any income you make that's not taxed is usually considered self-employment income, and you're responsible for paying both self-employment tax and income tax on those earnings,” she wrote for CNET. “That's an important distinction — if you just calculate income tax, you could end up with a surprise tax bill.”
Income tax is levied by federal, state and local governments. Self-employment tax covers Social Security and Medicare contributions that would normally be split with an employer.
Self-employed people can estimate their tax bracket based on the previous year’s earnings or projected income for the current year. And because you don’t have taxes withheld from each paycheck — as a W-2 employee would — the IRS generally requires quarterly estimated payments if you expect to owe $1,000 or more.
Miss those quarterly payments, and you could face penalties on top of your tax bill.
5. It’s OK To Hire Help
Maybe you’re a master wordsmith or designer. The best babysitter or rideshare driver around. But numbers? Not your strength.
That’s OK. It’s perfectly reasonable to hire a professional accountant or tax preparer.
Even if they guide you through the early years of your business like CPA training wheels, you’ll gain peace of mind — and pick up knowledge along the way.
The Bottom Line
There’s a lot to learn as a side hustler — pitching clients, building a portfolio and, yes, filing taxes. Mastering the essentials early removes one more worry and frees you to focus on what you really want to do: grow your business.
This article was provided by MoneyLion.com for informational purposes only and should not be construed as financial, legal, or tax advice.
More From MoneyLion: