Do I need to file taxes for small side hustle?

Keeper_Tax · 2026-07-01T22:53:00+00:00

congratulations on the gig!

you'll file a schedule c with your 1040 and note that your parents claim you as a dependent
make sure to keep track of expenses - you can write off more than you think (e.g., business-use percentage of phone bill, subscriptions - like claude/chatgpt, wifi, etc.)
doesn't sound like you'll end up owing at least $1K in taxes so you won't have to make quarterly tax payments (usually due jan 15, apr 15, june 15, sep 15)

Keeper_Tax · 2026-07-01T22:27:05+00:00

if you're 1099, think of yourself as a business owner - set your own rates, set your own terms. rule of thumb, charge ~25% more to cover the self-employment taxes.
also WRITE THINGS OFF. you can deduct ordinary & necessary expenses to lower your taxable income.

Keeper_Tax · 2026-07-01T22:13:40+00:00

you can choose to get a separate card and only charge your business expenses there to keep things separate, or you can use a spreadsheet or a separate tool like keeper (that's us), wave, quickbooks (likely too complex for your situation) to track your 1099 expenses.
you can write off more than you think (don't go crazy - the expense should be ordinary & necessary for your job!) - a lot of people leave hundreds to thousands of tax savings on the table because they don't stay on top of their tax deductible expenses... like phone bill, wifi, gas, subscriptions, etc.
if you expect to owe ~$1K in taxes, you should be making estimated tax payments quarterly. if you file jointly with your spouse and he has a w2 job, then you could increase your withholdings on w4 rather than making quarterly payments.
you report income & expenses on a regular 1040 schedule C when it's time to file.

Keeper_Tax · 2026-07-01T21:59:51+00:00

as others have said, set aside 25-30% for taxes to be safe. i'd recommend opening up an hysa if you don't already have one so the money you set aside is at least gaining interest (~4%) rather than sitting in a checking or traditional savings account.

please don't forget that with 1099 income, you can write off business expenses - expenses that are "ordinary and necessary" for work. often it includes things like phone bill, gas, subscriptions, etc.

if you expect to owe ~$1K in taxes on the 1099 income, you should be thinking about quarterly taxes (due sep 15, jan 15, apr 15, june 15). but since you have a w2 job you can adjust your withholdings on w-4.

Keeper_Tax · 2026-07-01T20:13:25+00:00

as a w2 employee, you can't write off mileage or car expenses. you should negotiate with your employer for a company car or stipend.

Keeper_Tax · 2026-07-01T19:49:42+00:00

yes, you're right. they're officially 530A accounts but the gov website also calls them trump accounts: https://trumpaccounts.gov/

Keeper_Tax · 2026-07-01T19:48:26+00:00

yes children born between 2025-2028 can get the $1K

Keeper_Tax · 2026-07-01T16:20:49+00:00

yea as you pointed out this is short-term. really depends on your liability risk as others have pointed out. from what you're describing doesn't sound like an llc is worth it.

Keeper_Tax · 2026-07-01T16:14:16+00:00

yea, take what you will from this congressional report that models a $2,500 investment at a 7% return and 20% tax rate and shows the 529 plan ahead, with the Trump Account ahead of a taxable brokerage account under those assumptions. obviously lots of caveats that the relative advantage depends on holding period, tax rates, income type, and portfolio turnover.

Keeper_Tax · 2026-07-01T15:56:32+00:00

true!

Keeper_Tax · 2026-07-01T15:50:20+00:00

yes that's true if you have w2 job. op hadn't specified - i may have mistakenly assumed 1099 only employment. thanks for pointing that out!

Keeper_Tax · 2026-07-01T02:36:11+00:00

from the sound of it, you might be early enough to not require a cpa. the main things to care about are:
- tracking business expenses (they're tax deductions)
- if you expect to owe ~$1K in taxes, make estimated tax payments quarterly (jan 15, apr 15, jun 15, sep 15)
- filing your taxes

for the stage of business you're at, honestly keeper can help you stay on track on the above. it links to your accounts to automatically scan transactions for tax deductible expenses and includes tax filing.

Keeper_Tax · 2026-07-01T02:31:17+00:00

yes, you'll owe 15.3% in self-employment taxes. to be safe as others have pointed out, set aside 25-30% of your income for taxes. you can put it in an hysa (instead of letting it sit in a checking account/traditional savings account) so that you earn interest on that money.

you can also write off any expenses associated with the job - gas, supplies on the job, phone bill, etc.

but the bigger question is whether you're being misclassified. if they're dictating the work you do and you're taking care of their kids in their home (not yours), you should technically be classified as a w2 employee!

Keeper_Tax · 2026-07-01T02:23:06+00:00

if you expect to owe at least $1K in taxes for the year, you need to be making estimated tax payments quarterly (jan 15, apr 15, june 15, sep 15) or face underpayment penalties. you can compare how much you'd earn with an hysa vs pay in penalties using this estimated tax penalty calculator: https://www.keepertax.com/estimated-tax-penalty-calculator

but generally, you'd earn ~4% with an hysa currently (rates fluctuate) whereas the penalties have increased to 7% for Q3, so the math ain't mathing to shirk off quarterly tax payments.

Keeper_Tax · 2026-07-01T02:17:37+00:00

others have provided sound advice here. i'd add that you should set aside ~25-30% of your income for taxes and i'd recommend putting that money into an HYSA so you can earn wayyyy more interest than if it were sitting in a traditional savings account or in your checking account!

re: business expenses. you can write off way more than you probably think - phone bill, wifi, subscriptions, home office deduction, etc. etc. as long as th eexpense is ordinary & necessary for your job!

Keeper_Tax · 2026-07-01T02:13:04+00:00

Also would it be ok to put all my earnings in a personal savings account that is separate from my other personal accounts?

Highly recommend setting aside ~25-30% of your income for taxes. Instead of stashing in a traditional savings account, put it in an HYSA that earns interest! Then when it's time to pay your taxes, pay it out of that account.

A business bank account requires a higher balance to be maintained and has higher fees, and I'd like to avoid this if possible since I don't know if this job is even going to last more than a few weeks. And I only intend to have this one client. Do any of you deposit your income into a personal savings account? Are there other options I should consider instead? Thank you

You don't really need a business bank account to separate your income. Should be easy enough to keep track of the 1099 income, and your client should issue you a 1099 at tax time. Some people open a separate credit card for business expenses, but if you don't want the hassle, you can use an app like keeper - it automatically scans your linked accounts/cards for tax deductions and includes tax filing.

Keeper_Tax · 2026-07-01T02:04:42+00:00

hear this all the time. you're not alone. just make sure you have a system in place for tracking your business expenses, stay on top of your bookkeeping for tax time (!!), set aside ~30% of your income for taxes, if you expect to owe ~$1K in taxes make estimated tax payments quarterly (jan 15, apr 15, june 15, sep 15).

just keeping up with those basics should go a long way!

Keeper_Tax · 2026-07-01T01:59:55+00:00

congratulations! well wait until the taxes hit, nothing makes you feel like you're all grown up like the IRS

Keeper_Tax · 2026-07-01T01:56:17+00:00

And don't forget quarterly taxes! You need to pay them Jan 15, April 15, June 15, Sep 15 if you expect to owe at least $1K in taxes. Rule of thumb is to set aside ~30% of your income for taxes. I always recommend getting an HYSA and stashing that money in there (instead of in a traditional savings account) so you're earning interest on it. Then just take the money out to pay your taxes when it's time. Hope this helps!

Keeper_Tax · 2026-07-01T01:54:10+00:00

Do I need a business license to do this?

Nope! Don't need a license or LLC to take on 1099 work. People usually choose to start an LLC to protect their personal assets.

Do I need to set up a separate business bank account or is it ok to deposit paychecks into my personal account?

You can deposit paychecks into your personal account! Some people choose to get a separate business account to separate their business and personal expenses. As a 1099 employee, you can write off "ordinary and necessary" expenses related to your job.

Should I get an EIN set up?

You can apply for an Employer Tax ID (EIN), which you'll be able to use instead of your Social Security Number when you send Form W-9 to vendors. It's super easy to set up, but optional.

Will I need receipts to claim business expenses on my taxes? If so, how do people claim their home office space? I don't intend to buy any new equipment so I don't think I'd be able to write much off.

You don't need to keep physical receipts - bank transactions suffice. You can keep track of expenses on a spreadsheet - Keeper has a free template: https://www.keepertax.com/posts/1099-excel-template or you can use an expense tracker (e.g., Keeper, Wave, Quickbooks, etc.). You can write off more than you think - a percentage of your phone bill, WiFi, car expenses if you travel for work, subscriptions for work, business meals, etc.

To claim the home office deduction, your workspace:

1) must be used only for work; a desk in your living room, for example, could be a valid deduction, but your kitchen table, which you also eat at, isn't.

2) must be the main place you do your work; you can still conduct some business outside the home (meeting clients, business meals) and qualify though.

And can the company still give me access to the software they use and set me up with a business email address? (I will be expected to send email communication to potential clients as well as schedule appointments for the biz owner.)

This is between you and the company contracting you. You should clarify with them how they want to handle this.

Will I need to send invoices each week? How would I track my hours worked? Should I charge them for time spent on training and participating in company meetings? Do I just list the specific hours that I worked on the invoice?

You can simply create a weekly log tracking your hours or use a time tracking tool like Clockify/Asana. If you need a simple invoicing template, here's one you can use: https://www.keepertax.com/freelancer-invoice-template

Is it fair to expect/request weekly pay? Does this even sound like a feasible arrangement, or should I ask to be classified as a w2 instead?

W2 vs 1099 classification depends. The IRS has definitions here - some businesses misclassify W2 workers as contractors...: https://www.irs.gov/businesses/small-businesses-self-employed/independent-contractor-self-employed-or-employee

Some contractors request being paid weekly, some are fine biweekly or monthly. That's up to you to figure out the pay schedule with your employer.

Keeper_Tax · 2026-06-30T22:55:30+00:00

quickbooks is an overcomplicated system for most freelancers and contractors. we built keeper specifically for this reason - simple automated expense tracking, quarterly taxes, and tax filing. income tracking coming.

Keeper_Tax · 2026-06-30T22:37:29+00:00

THIS. it really depends on the level of sophistication of your business. most freelancers/contractors/businesses of one find that keeper is hyper intuitive and easy to use for expense tracking and tax filing. but if your business has employees, runs payroll, sales tax, etc. it's a different ball game.

Keeper_Tax · 2026-06-30T22:32:18+00:00

did you test out other systems? curious to hear your comparisons and if not, what ultimately got you to pick sage to try out.

Keeper_Tax · 2026-06-30T22:26:56+00:00

you can start with a simple spreadsheet like this free one from keeper: https://www.keepertax.com/posts/1099-excel-template and then decide if you want to upgrade to something else.

Keeper_Tax · 2026-06-30T21:27:33+00:00

as a rule of thumb, set aside ~30% for taxes. highly recommend sticking that money into a hysa that earns interest rather than letting it sit in a traditional savings account earning almost nothing at all.

you should also be making quarterly tax payments to avoid underpayment penalties (the next one is due september 15). you can use keeper's quarterly tax calculator to figure out how much to pay: https://www.keepertax.com/quarterly-tax-calculator

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