Got a Side Job? Be Sure You Know Your Tax Benefits
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With your Money Briefing, I'm Charlie Turner in New York for The Wall Street Journal. If you're one of the growing number of Americans with a side job, you should know the tax advantages that come with a gig. We'll have more on this in a moment. First, here are some money headlines. There have long been calls to raise the federal minimum wage, which has been at $7.25 an hour since 2009. But economists surveyed by The Wall Street Journal expect that raising the federal minimum wage, even by a relatively small amount, would lead to job losses. About a third of business and financial economists surveyed in the past week as part of the journal's monthly poll said an hourly minimum wage above the current level of $7.25 an hour but below $10 would cause job losses.
Some 26 percent said employers would start to cut payrolls in the $10.01 to $13 range. Still, the average appropriate level of the minimum wage among the economists who favor one was $10.83 an hour, significantly higher than the level today.
What tax advantages should side‑job earners know about?
Just over half of respondents said a higher minimum wage would hurt lower income households by reducing employment. Just under a third of survey respondents said there shouldn't be a minimum wage at all. The number of Americans filing applications for new unemployment benefits fell last week to the lowest level since October 1969. The Labor Department said initial jobless claims declined by 8,000 to a seasonally adjusted 196,000 in the week ended April 6th. After a blockbuster 2018, the labor market showed signs of cooling earlier this year. Jobless claims rose steadily between September and late January when they reached 244,000, while jobs growth stalled in February. Since then, however, the data on claims and hiring have firmed.
Coming up, J.R.
Which common money headlines frame the conversation about side gigs?
Whalen talks with tax attorney Mark Kohler on tax breaks available to people with side hustles.
It's not unusual to have a full-time job and then have a job on the side. But if you do, it's important to know tax benefits and deductions available to you. Knowing them could save you a lot of money. And accountant and tax attorney Mark Kohler is on the line with us with some details. So, Mark, is it true that deductions available related to someone's side job are there and they're different from their primary job?
Oh, absolutely. And it's really an exciting opportunity. I know I sound like a geek saying that. Tax savings is fun, is exciting, but it really is important to understand the opportunity you have here. One in three Americans, it's estimated now, have a side gig, some sort of side business, side income, and the write-offs related to that, you can't even touch with it as a W-2 wage earner. So these are really, really important.
You prepare taxes for lots of people with side jobs, namely rideshare drivers, because of all the deductions you can rack up for them. What are some of the deductions that people with side jobs have available to them?
Of course, we want to look at the type of business it is, because that's going to really dictate the type of write-offs you're going to have. If you have maybe a small little construction business on the side or a service business, tools and equipment and Auto deductions will probably be a little more typical versus someone that has an online business where they might have internet ads and internet expenses and software and things like that. So in general, we want to look at what type of business you have, but there's always the core write-offs I love. I want to do home office. I want to do cell phone and cell phone services, electronics. I want to do auto whenever you jump in your car to drive anywhere to meet a customer, client, pick up supplies.
And then I want to be thinking about travel and even meals when I'm out talking business with others. This side gig, this is the big important takeaway, J.R., It is a side business. It is just as legit as Microsoft or AT&T. It's just a microcosm in your world. And so you want to treat it like a business and think of the expenses you have to make money.
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