Q: Should I include “side hustle” income and expenses on my tax return?
A: Yes, absolutely.
Reporting your side hustle isn’t just a rule – it often gives you clarity and can even improve your tax outcome.
Even part-time gigs, freelancing, consulting, reselling or weekend projects are considered business activity in the eyes of the IRS. That means income and related expenses should be reported.
Here’s why this matters:
Common expenses are often overlooked. Home office use, business mileage on your personal car, supplies, software, marketing and equipment may all be deductible – if they are ordinary, necessary and reasonable in amount.
Losses can reduce other income. If your side hustle has legitimate startup costs or early losses, those losses may offset income from your full-time job – potentially lowering your overall tax bill.
The IRS expects a path to profit, though. Occasional losses are normal, but if losses continue year after year with no sign of profitability, the IRS may question whether the activity is truly a business rather than a hobby.
You don’t need perfection – just reasonable records. You don’t have to spend excessive time preparing reports. Use actual bank statements, mileage logs or simple summaries. Even basic organization gives you better insight into whether your hustle is truly working.
The bottom line: A side hustle isn’t optional for tax reporting – but it is an opportunity.
When you track it properly, you may reduce taxes, gain financial clarity and make smarter decisions about whether to grow it, adjust it or move on.
Send questions about your taxes to Vincent Hicks, a CPA based in Cambridge who has more than 20 years of experience, at vincent@hickscpasolutions.com. You can call Hicks at (859) 553-0788.
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