Have a side gig? Report to Uncle Sam!

by | Jan 16, 2020 | Toby Talks Tax | 0 comments

This is January 2020, and I’m ready for the New Year to start off on the right paw.  Early last year I began stockpiling a hefty number of bones, just in case I suffered an unexpected hunger pang or two, or maybe wanted to invite some puppy friends over for fine dining.  Various acquaintances of mine took notice.  They all wanted to collect bones too and started making me some pretty respectable offers. I let a couple bones go here and there, at a small gain, naturally, and before long, I was flipping bones for much larger profits on a regular basis. 

I quickly realized I was running a bona fide business, and I have a bona fide second income.  I call the business Toby’s Treats.

And now I’m facing the task of reporting last year’s income from that side gig  – Uncle Sam requires a full accounting because he wants a share of the meaty bones too.  But I shouldn’t have many problems with taxes because my paperwork for last year is in good order.  Here’s what I have that should help keep the tax wolf away from my doggy door:

  • A ledger showing all income I took in for the sale of bones and related items.
  • The ledger also notes each expense I paid related to the sale of bones (including administrative, such as cell phone cost); the amount of each expense; the date I paid the expense; and the kind (“the category”) of expense, such as postage and shipping.
  • All receipts for every expense in the ledger, all filed neatly and chronologically according to category, not vendor.
  • A travel log detailing each business-related trip I’ve made. I’ve jotted down the date, destination, and purpose of the trip; exact mileage; airfare; and all other associated costs, such as parking and tolls for my Puppy Mobile.
  • Bank and credit card statements for each month of the year.
  • Proof I’ve made estimated tax payments for each quarter.

I’ll be preparing my tax return for 2019 this month, and if I owe because I underestimated my liability due to my profitable side gig, I’ll ask my Boss at Law Offices of Christy Lee, P.C., for counsel. She’ll give me proactive tax advice that will help keep coins in my doghouse!