If you made money last year from a side hustle or gig work, tax time can feel stressful and confusing. We’re here to help.
Self-employment taxes are the Social Security and Medicare taxes individuals pay on wages outside of a W-2. When you’re an employee, your employer covers a portion of these taxes on your behalf, but for nonemployee compensation you’ll need to foot the bill yourself. This most commonly applies to earnings shown on certain 1099 forms like the 1099-MISC and 1099-NEC.
Even if you don’t have your own business, the IRS will treat nonemployee compensation as self-employment income and will tax you as a sole proprietor. If you haven’t been putting enough money aside for taxes from your contractor earnings, the balance due on your taxes can come as a shock and spoil your side hustle mojo.
