IRS Side Hustle Income Management Requires 25-35% Tax Set Aside

AI Summary

Veronica Karas, CFP at CAPTRUST, emphasizes that managing multiple side hustles increases tax complexity significantly. It is advised to set aside 25% to 35% of earned income for taxes due to the lack of automatic withholding, which is typical of traditional W-2 employment. Organized recordkeeping for income and expenses is crucial to avoid underreporting to the IRS and missing out on legitimate deductions. Effective tax planning and quarterly payments can help manage potential penalties, making tax efficiency essential for those with multiple income streams.