When a paycheck comes from an employer, taxes are withheld automatically. Side gig income arrives as gross pay with nothing taken out. That full amount is not yours — a portion belongs to federal taxes and self-employment tax on top. Most people find this out at the worst possible time.
The short version
Track every payment by date and source. Track deductible expenses. Set aside 25-30% of net earnings for taxes immediately — before it gets spent. Check your state's rules if you're also receiving unemployment benefits.
Track gross income by date and source
Log every payment: the date, the platform or client, and the gross amount. Individual entries with dates matter at tax time and when reporting income for other purposes.
Track expenses
Business expenses related to the side gig can reduce taxable income — mileage, equipment, supplies, a portion of phone and internet costs. These need to be documented with dates and amounts.
Set aside taxes on every deposit
A common guideline for self-employment income is to set aside 25 to 30 percent of net earnings for taxes. That holdback should move to a separate account immediately — before it gets spent on anything else.
Unemployment and side gig income
If you're receiving unemployment benefits and earning side gig income simultaneously, most states require you to report those earnings. The rules vary by state and income threshold. Failing to report can result in overpayments that need to be repaid. Check your state's specific rules directly with your unemployment office.
Gus's kitchen-table rule
The side gig check is not what it says it is. Take out the taxes first, before spending any of it, every single time. Future Gus will thank you.
Gus is not a financial advisor. The Money Mess is educational content only — not financial, tax, legal, or investment advice. Based on real life events.