Consulting work/Side Gig....help with reporting and taxes

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Nebraska_Drought
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Joined: Fri Nov 13, 2020 11:19 am

Consulting work/Side Gig....help with reporting and taxes

Post by Nebraska_Drought »

I work in a scientific field and I periodically will get a side gig/hustle as a "consultant" for a variety of things pertaining to my expertise. This last year, I was a consultant to a law firm arguing a case in which my expertise were needed. I worked at home on this, in my office, and did the work during nights and weekends (outside of my normal job). In the end, I made a about $6,000 which they paid me. I filled a 1099 to them, so I would expect that the work will be reported to the IRS, correct?

My questions are: 1) I set aside 30% of the money I earned for taxes, I plan on paying them with my normal taxes when I do them for 2020. Are there any deductions I can utilize? I figured not, since this was not a permanent business, but a side gig.
2) For those who use TurboTax, will I enter this as "other income" and let Turbo Tax figure out the tax?
3) Any hints or ideas as to not screw this up?
livesoft
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Re: Consulting work/Side Gig....help with reporting and taxes

Post by livesoft »

You should file a Schedule C or C-EZ for your self-employment income. And a Schedule SE. This is all pretty routine and TurboTax should guide you unless you lie to TT. Don't lie. Tell TT that you had self-employment income. It is easy.

This is not "Other income."
Last edited by livesoft on Fri Jan 15, 2021 2:43 pm, edited 2 times in total.
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knightrider
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Re: Consulting work/Side Gig....help with reporting and taxes

Post by knightrider »

File Schedule C and deduct all business related expenses.

I wouldn't bother doing the home office deduction. For $6k income it might save you $20 :-) Not worth it for the added complexity to your taxes and increased audit risk.
Jack FFR1846
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Re: Consulting work/Side Gig....help with reporting and taxes

Post by Jack FFR1846 »

As far as the taxes, so long as the IRS sees it coming as you're earning, they really don't care how. I set my exemptions on my W4 to with hold as much as possible as if I were single. Then I have another $100 per pay period with held. Last year, I also sent in quarterly estimated taxes but that resulted in my CPA laughing out loud during her phone call to tell me that I had fourteen grand coming back from the feds.
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MP123
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Re: Consulting work/Side Gig....help with reporting and taxes

Post by MP123 »

Yes, this should go on Schedule C, not other income. It's really not hard, TurboTax will help you. Don't forget to deduct any expenses that might apply.

It's good that you "set aside" 30% for taxes. However, the IRS expects you to set it aside with them throughout the year rather than waiting to pay at the end. You might owe a small penalty for underpayment depending on your overall tax situation, but it probably won't be much. Next time it's worth considering making estimated tax payments, unless your other taxes (W2 withholding) and income situation puts you in a safe harbor.
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