Introduction

If you earn money outside traditional employment—freelancing, rideshare driving, selling goods, or consulting—you’re responsible for reporting that income and paying any tax due. In my practice I see two things help most taxpayers: good records and early quarterly estimates. Below are the practical steps, common forms, deductible expenses, and deadlines to keep you compliant and lower your tax bill.

Step-by-step filing checklist

  1. Gather income records
  • Collect all 1099s (for example Form 1099-NEC for nonemployee compensation) and any 1099-K or merchant statements you receive. Keep your own income log for cash and electronic payments that may not generate a form.
  • Keep invoices, bank statements, and platform summaries.
  1. Choose the right tax forms
  1. Track and claim deductible expenses
    Common deductible categories:
  • Home office (regular and exclusive business use rules apply).
  • Supplies, software subscriptions, continuing education.
  • Business mileage or actual vehicle expenses (keep a contemporaneous log).
  • Advertising, client meals (subject to limits), subcontractors, and professional fees.
  • Health insurance premiums (self-employed deduction rules apply).

Many taxpayers also qualify for the Qualified Business Income (QBI) deduction (up to 20%) if they meet the rules—check eligibility before claiming.
(See IRS self-employed deductions: https://www.irs.gov/credits-deductions/individuals/self-employed-deductions)

  1. Estimate and pay taxes quarterly when required
  1. File and pay by the deadline
  • File Form 1040 (with schedules) by the annual tax deadline (usually April each year). If you need more time to file, submit Form 4868 to request an extension to file—not an extension to pay.
  • Pay any tax owed by the regular due date to avoid interest and penalties.
  1. Consider entity choices and payroll
  • Most side gigs start as sole proprietorships reported on Schedule C. If income grows, consider forming an LLC or S-corp for liability, tax, and retirement planning advantages—consult a CPA.

Recordkeeping best practices

  • Use accounting software or a dedicated spreadsheet and reconcile monthly.
  • Keep receipts (digital photos are acceptable). Retain records for at least three years, longer if you have special circumstances.
  • Record mileage contemporaneously—apps make this easier and provide documentation if audited.

Common mistakes to avoid

  • Underreporting cash or platform income. Always report all income even if you didn’t receive a 1099.
  • Missing estimated tax payments and incurring penalties.
  • Mixing personal and business expenses (keep separate accounts when possible).
  • Incorrectly claiming a home office or business-loss deduction without meeting rules.

Real-world example

A freelance graphic designer I advised tracked subscriptions, client invoices, and a home office percentage. By documenting expenses and paying quarterly estimates, she avoided underpayment penalties and lowered taxable income through legitimate deductions.

When to get professional help

  • Your gross side-gig income grows substantially.
  • You hire employees or regularly work with contractors.
  • You’re unsure about state tax nexus or multistate filing requirements.
    A CPA can help choose entity structure, optimize deductions, and set up payroll or retirement plans.

Further reading and internal resources

Authoritative sources

Professional disclaimer

This article is educational and does not replace individualized tax advice. For specific tax planning and filing questions, consult a qualified tax professional or CPA.