Side hustles are one of the fastest-growing income pathways for LGBTQ+ professionals. Whether you freelance, create digital content, sell products, run workshops, or take on project-based work, earning extra money can offer freedom — but it also comes with tax responsibilities that many first-time side hustlers aren’t taught. Understanding the basics helps reduce stress, avoid surprises, and build long-term financial confidence. Here’s a simple, accessible guide to how taxes work when you have a side hustle.
Side Hustle Income Is Usually Considered “Self-Employment Income”
If you’re earning money outside of a traditional W-2 job, the IRS typically classifies it as self-employment income. This applies whether you:
- Do freelance work
- Sell art or crafts
- Receive payments through apps
- Offer consulting or coaching
- Run a micro-business
- Create digital products or content
Even small amounts of income are generally taxable, and platforms may send you a 1099 depending on how much you earned. But you are responsible for reporting the income whether you receive a form or not.
You May Owe “Self-Employment Taxes” in Addition to Income Taxes
Side hustlers not only pay federal and state income tax — they may also owe self-employment tax, which covers things normally withheld by an employer:
- Social Security
- Medicare
Understanding that these taxes exist helps you avoid surprise bills later. You don’t have to become an expert, but awareness makes planning easier.
Track Every Dollar You Earn — and Every Dollar You Spend
Keeping good records is one of the best ways to reduce anxiety during tax season. You don’t need fancy software to get started. A simple spreadsheet or notes app can work.
Track:
- Income you receive
- Business expenses
- Invoices sent
- Payments received
- Receipts for purchases related to your hustle
Clear records help you understand your profit, stay organized, and communicate easily with a tax professional if you use one.
Learn Which Expenses May Be Deductible
Side hustles have costs — and some of these may be deductible if they’re ordinary and necessary for your work. Examples may include:
- Software or apps
- Supplies or equipment
- Website fees
- Advertising or marketing
- Professional services
- Education related to your business
- A portion of home office expenses (if applicable under IRS rules)
These deductions can help reduce taxable income. You don’t need to know every rule — just keep good records so a tax professional can guide you.
Consider Setting Aside Money for Taxes Throughout the Year
Because taxes aren’t withheld automatically, many side hustlers set aside a percentage of their earnings in a separate savings account. Even starting small — like saving a portion of each payment — can create a cushion when tax season arrives.
Consistency matters more than precision.
You May Need to File Quarterly Taxes
Depending on how much you earn, you may be required to make estimated quarterly tax payments. This helps you avoid owing a large amount at the end of the year. Not every side hustler needs to do this, but it’s helpful to be aware of the possibility.
Seek Support When You Need It
Managing taxes as a side hustler can feel overwhelming, especially if you didn’t grow up with financial guidance or if tax conversations stir up anxiety. Consider leaning on:
- LGBTQ+-affirming tax professionals
- Community workshops
- Free online IRS resources
- Local small business centers
Support is part of the process — you don’t have to figure it out alone.
Side Hustle Taxes Are Manageable With the Right Tools
Understanding the basics helps you feel prepared, not panicked. With simple recordkeeping, awareness of your obligations, and a clear system for staying organized, you can turn your side hustle into a sustainable, stress-free source of income.
You deserve financial clarity — and your creativity deserves to thrive.
