Who Should Be Filing Taxes? Your Side Income May Earn You A Tax Refund

If you juggle contract work or gig work, it’s not always easy to figure out whether or not your income requires you to file your taxes. If you are earning money through activities like driving a car for booked rides or deliveries, renting out a property, selling goods online, renting equipment, and providing temporary freelance work, then odds are that you are required to file and pay taxes. You might also get a cash refund from a tax credit. 

If your income from gig work totals more than $400 per year, then you do need to file your taxes. The IRS expects many self-employed people to determine how much they may owe and pay taxes each quarter. 

You should save a portion of your income each month to pay taxes if you are self-employed. A safe rule of thumb is saving the percentage of your income that matches the tax rate of your income bracket. For example, if you are a single person earning around $14,000 each year in 2025 you would be in the bracket that is generally taxed at 12 percent. Setting aside 12 percent of your income each month should help make sure you are ready in case you owe taxes. The IRS website provides updated details so you may want to check each year. If you receive money for contract work through an LLC or other registered business you own, the percentage will be different. You should also pay attention if you live in one state, but work in another state. 

Filing taxes could reduce how much you owe or result in a tax refund. Many low and middle income households are eligible for tax credits worth hundreds or thousands of dollars. You may be eligible for benefits like the Child Tax Credit or Earned Income Tax Credit, which both require you to earn some income to get them. While the filing itself can be difficult, the benefits and refunds that you may receive make it worth it.