Before you know it, the end of the calendar year will be here. Many temp employees, as well as full-time employees, are doing the side hustle to earn some spending cash for the holidays and that long-awaited winter holiday. Side hustles can be great opportunities to use your skills and experience doing something you enjoy while earning money as your own boss, but don’t forget about April 15th.
The IRS reported that during Fiscal Year (FY) 2016, it collected more than $3.3 trillion, processed more than 244 million tax returns and other forms, and issued more than $426 billion in tax refunds. It is the goal of the IRS to collect as much tax revenue as it can, and it disburses less than $1 for every $100 it receives.
Profits include taxes – so while thinking about those gains and finding ways to pay only what’s required, take the right steps to avoid an audit and the risk of having to pay more taxes and penalties?
9 Triggers or red flags that catch the attention of the IRS
1) Not paying quarterly estimated taxes in line with your type of business
2) Not reporting all the income, which the IRS has information about from other sources
3) Claiming unusual or larger than average deductions
4) Taking advantage of nontypical side hustle deductions (there is a gray area between legitimate expenses and taking personal advantage
5) Taking liberal home office deductions
6) Lack of documentation for meals, travel, entertainment, and transportation
7) Making overly large charitable donations
8) Failing to report a foreign bank account, and
9) Taking a high amount of losses
Remember that IRS agents are paid to spot these red flags. Even though returns are electronically processed, no side hustle is safe from the microscope. If you do have legitimate reasons for provoking any triggers, you’ll need to have proper documentation to support your deductions.
While we applaud the initiative and hard work that goes into a side hustle, Springborn Staffing recognizes that you still need consistent work that both uses your skills and fits your personality. We make it easier to find great work. We know Maine employers – really well – what kind of people they hire, what it’s like to work there. Often we know about jobs before they are posted.
If you’re willing to let us get to know you, we can make your search more streamlined and productive. We’ve been helping people like you build a pathway to success for more than 30 years. We’re Passionate About Your Career. Contact us today.