Have a Side Hustle? Important Things to Remember Come Tax Time

Do you work full-time and have a gig on the side to earn a little extra money?  I do. In 2015, nearly one million Canadians filed taxes indicating that they worked a secondary job in addition to their full-time income – and that doesn’t include all the people who string together multiple part-time jobs to make ends meet or earn a little income on the side. If you have a side hustle, whether it’s driving an Uber, being part of a direct sales company, or even pet sitting for cash, I’ve got some great tips for you this tax season.

Earlier this year, I attended a TurboTax Self-Employed Breakfast Club and came away with a few important tips and tricks that can come in handy at tax time.

First of all – you must report all income – I put it in bold because it’s very important. You may think you’re not earning enough to have to file a tax return, but even if you don’t earn any income after your expenses are accounted for, you are still a business owner when it comes to tax time. That means when you are just starting out, you need to claim this income.

But here’s the good news – when you own your own business, there are a lot of deductions you can use that you can’t access as a regular employee.  If you’re not sure about your employment status, check your documents – if you receive a T4 you’re an employee, a T4A is for self-employed individuals or freelancers. If you drive to get to your clients you can deduct mileage, you can deduct some office supplies, insurance, mobile phone bills, and even some of your housing costs if your business operates out of your house.

Track all of your expenses. The best way to do so for me has been with the QuickBooks Self Employed app. It is really easy to use for things like mileage, expenses, HST tracking and even invoicing. Users find an average of $4,340 in tax savings each year. Every penny matters. It really does help you track and makes tax time so much easier.

It’s so important to save for taxes. One big thing to remember if you have a side hustle that you run yourself – any earnings from your side hustle have not been taxed yet. Especially if your day job is a regular 9-5, it’s easy to forget that you need to pay the same tax rate on your side hustle earnings as you do your regular income. You should plan ahead and avoid a nasty surprise at tax-time by putting a portion of each of your sales aside for tax purposes. If you don’t think you have the discipline to set aside money after every sale, you can use Form TD1 and have extra tax deducted from your regular job so that you don’t have the temptation not to save. I have seen far too many that owe come tax time.

Remember, any taxes owed are due on April 30th even if you don’t file until June 15th.

Ask for help when you need it. One of the new ways TurboTax helps us DIYers is by giving us easy access to the experts. You can have whatever level of support you need.  You can use the SmartLook feature to speak with and even share your screen with an expert to ensure you are maximizing your return.  You simply access the help panel and you can get online live product support or schedule a callback from a tax expert or product specialist. This way you can get help when it’s convenient for your schedule. The screen sharing capability of SmartLook allows the tax expert to circle boxes or numbers on your screen to guide you in entering your information. It can’t be easier than that.  You have whatever level of support you need.

Whether it’s driving for Uber, renting out your basement with Airbnb, re-selling items you get online or at thrift stores, selling cookies or cakes or things you make at a farmer’s market, selling items through a direct sales company, babysitting, pet sitting, or tutoring the neighbour’s kid, there are many options for earning some money on the side. With TurboTax solutions for Self-Employed , reporting that income at tax time has never been easier.

 

This is a sponsored conversation written by me on behalf of TurboTax. The opinions and text are all mine.


 

4 thoughts to “Have a Side Hustle? Important Things to Remember Come Tax Time”

  1. In all honesty, I get confused a lot in terms of computing my finances, especially the taxes. I haven't tried QuickBooks or TurboTax just yet. But maybe I should. I'll try them and see if they work for me 🙂 Anyways, great content. Cheers!

    1. Thanks, Kyla, I find both are super easy to use which actually frees up time to be doing the things that can help your business grow!

  2. I'd like to enter freelancing but I don't know anything about the finance part of it like filing income taxes. I learned a lot reading this. Thanks for sharing this!

    1. Hi Erika, when I started I knew nothing! TurboTax is great though it walks you through every step and if you have a question you can ask the experts.

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