Getting Ahead: We all want to get ahead, and in this economy working one job won't do. Many Americans mow lawns, babysit, tutor the neighbor's kids and do everything they can do stay afloat. But the sad news is, the IRS wants it's cut of that pay! Before you get started on your side-business, learn what to do if you don't want to owe the IRS.
1099 IRS Form 1099-Misc is your best friend. You'll need it to report all income earned from your side gig.
Caught Red-Handed You might be thinking, "Well this is under-the-table, the IRS will never know about this moolah!" If we're talking about a small sum, say $100, then you're right. The IRS has bigger fish to fry and they're not going to nail you for chump change.
But if you're making big bucks from your side job and putting that money in your bank account, you're caught red handed. Why? Because the IRS can look at your bank deposits versus the income you reported. If the numbers are way off, that's an IRS Audit Red-Flag.
Assets Your assets paint a vivid picture about your lifestyle for the IRS. If you're driving a luxury car and you're living in an area out of the range you reported for income, the IRS gets suspicious. It may be your hard-earned money, but Uncle Same wants his cut. And he's mighty persistent about getting it.
Heads Up: So what's the verdict? If you can make good money working a side gig, do it! But don't forget to give the Taxman his cut first. Report all income you make on Form 1099-MISC. You can even take advantage of Small Business Tax Deductions, a big help when you're paying for expensive equipment like photography equipment or landscaping tools.