Do You Have to Report Side Hustle Income?

Yes. You have to report side hustle income on your tax return, even if it came from part-time or temporary work, you were paid in cash, property or virtual currency, or you never got a Form 1099 or W-2 for it (IRS Gig Economy Tax Center). If your net earnings from self-employment are $400 or more, you must also file a return and pay self-employment tax using Schedule SE (IRS Pub. 334). Most people with a side business report their income and expenses on Schedule C.

All income counts, with or without a form

According to the IRS, all income, whatever the amount, is taxable unless the tax law says otherwise, even if you don’t receive a Form 1099-K. That includes payments you receive in cash, property or services (IRS FS-2025-08). Its gig work guidance says the same about every Form 1099: you must report all income, even if the businesses that pay you don’t send one (IRS).

A 1099 is an information return, and the IRS uses it to check whether people report their payments properly (IRS). Getting one doesn’t automatically mean you owe tax on every dollar it shows, though:

• Money from friends and family as a gift or as repayment for a personal expense, like your share of a meal or a ride, isn’t taxable income and shouldn’t be reported on a Form 1099-K (IRS).
• If you sell a used personal item for less than you paid for it, the sale doesn’t add to your taxable income, even if it appears on a 1099-K (IRS FS-2025-08).
• The gross amount on a 1099-K doesn’t subtract fees, refunds, shipping or discounts. You can deduct those when you report the income (same source).

The $400 self-employment tax rule

If you work for yourself, even part-time or through a gig app, you must file a tax return once your net earnings from self-employment reach $400 (IRS). At that point you also generally owe self-employment tax and file Schedule SE (IRS Pub. 334). Earning less than $400 doesn’t make the income tax-free. You still report it, and you may still have to file under the other filing rules (IRS).

Self-employment tax is Social Security and Medicare tax for people who work for themselves. The rate is 15.3%: 12.4% for Social Security and 2.9% for Medicare (IRS). A few details:

• It’s figured on 92.35% of your net profit, not on your total sales (IRS Form 1040-ES).
• For 2026, the 12.4% Social Security part applies only to the first $184,500 of your combined wages and self-employment earnings (same source).
• You can deduct the employer-equivalent half of the tax when figuring your adjusted gross income (IRS).
• It applies at any age, even if you already receive Social Security and Medicare benefits (IRS Pub. 334).

Because the $400 test uses net earnings, your business expenses count. See our guides to deductible business expenses and gross vs. net profit.

Which forms you’ll use

For a side business you run on your own, the IRS points to these forms (IRS):

Form	What it’s for
Form 1040	Your individual income tax return
Schedule C (Form 1040)	Reports your business income, expenses and net profit or loss
Schedule SE (Form 1040)	Figures your self-employment tax
Form 1040-ES	Figures and pays quarterly estimated tax

Schedule C is for income or loss from a business you run as a sole proprietor (IRS). If you’re weighing whether to form an LLC, see LLC vs. sole proprietorship.

Form 1099-NEC and 1099-K thresholds

The 2025 tax law, known as the One, Big, Beautiful Bill, changed when businesses and platforms have to send these forms. Here’s where things stand for 2026:

Form	Who sends it	Federal reporting threshold for 2026
1099-NEC	A business that paid you for work as a non-employee	$2,000 or more
1099-K (payment apps and online marketplaces)	The app or marketplace	More than $20,000 and more than 200 transactions
1099-K (card payments)	Your payment card processor	Any amount

Form 1099-NEC

Businesses report nonemployee compensation of $2,000 or more for payments made after December 31, 2025. Before that, the threshold was $600 (IRS). The $2,000 figure may be adjusted for inflation beginning in calendar year 2027 (IRS). So a 1099-NEC for 2025 work used the $600 threshold, while one for 2026 work uses $2,000.

Form 1099-K

Payment apps and online marketplaces must send a Form 1099-K only when your payments for goods or services exceed $20,000 and you have more than 200 transactions. The One, Big, Beautiful Bill retroactively restored this threshold. The 2021 American Rescue Plan Act had lowered it to more than $600 (IRS IR-2025-107; IRS FS-2025-08). You can still get a 1099-K below those amounts. Platforms are allowed to send one anyway, your state may have a lower threshold, and card payments have no minimum at all (IRS FS-2025-08).

Older IRS material may still show the $600 figure. A 2023 IRS tax tip, for example, says you could get a 1099-K after accepting more than $600 through apps or marketplaces (IRS Tax Tip 2023-61). The October 2025 fact sheet and news release are newer and reflect the current law. Whatever the threshold, it doesn’t affect whether your income is taxable (IRS FS-2025-08).

Hobby or business?

You report income from a hobby and from a business, but in different places. An activity counts as a business when your main purpose is income or profit and you do it with continuity and regularity. A sporadic activity or a hobby doesn’t qualify (IRS). The IRS Taxpayer Advocate Service lists signs that point to a business (Taxpayer Advocate Service):

• You run it in a businesslike way and keep complete, accurate books and records.
• You put significant time and effort into it.
• You intend to make a profit.
• You rely on it for your livelihood.
• It has made a profit in earlier years.

Hobby income goes on Schedule 1 (Form 1040), line 8j, not on Schedule C (IRS Pub. 525). Hobbies also get less favorable treatment. Deductions for hobby expenses are limited (same source), and you generally can’t use a hobby loss to offset your other income (IRS Pub. 334). If your activity falls somewhere in between, a tax professional can help you decide how to treat it.

Gig apps, withholding and records

If you do gig work as an employee, your employer should withhold tax from your pay. As an independent contractor, nobody withholds, and you may have to make estimated tax payments (IRS). Our guide to quarterly estimated taxes explains the 2026 due dates and how to figure the amounts.

The IRS also tells gig workers to collect and keep records and receipts throughout the year (same source). Good records let you report income the platforms didn’t put on a form and claim every expense you’re entitled to. Our guide on how to track business expenses shows a simple way to do it.