Whether you're balancing a side hustle, managing several part-time jobs, or taking on multiple gigs to increase your income, working more than one job can bring valuable flexibility and financial growth. However, it also adds complexity when it comes to filing your taxes. With multiple income sources, it’s crucial to understand how each one is taxed, how to avoid costly mistakes, and how to make the most of available deductions.
Navigating these challenges effectively not only simplifies tax season - it also gives you insight into financial strategies that can benefit your future. In fact, for those considering how to start a tax business, mastering multi-source income scenarios is a key skill that can set you apart in the industry. Here’s what you need to know about filing taxes when you have more than one job.
The IRS requires you to report all taxable income, regardless of how many employers you have. Whether you’re working two traditional W-2 jobs, freelancing on the side, or driving for a rideshare company, each source of income must be included on your tax return.
W-2 Jobs: If you’re employed by more than one company, each employer will issue a W-2 form by January 31. You’ll need to include all W-2s when filing.
Self-Employment Income (1099): If you do freelance work or have gig income (e.g., Uber, DoorDash, Upwork), you’ll typically receive a 1099-NEC or 1099-K. You’re responsible for reporting this income and paying both income tax and self-employment tax.
Tip: Keep organized records throughout the year. Use folders or digital tools to track income, receipts, and invoices from all sources.
One of the most common issues when working multiple jobs is underwithholding - when not enough tax is taken out of your paychecks, leaving you with a surprise bill at tax time.
Here’s why this happens:
Each employer withholds taxes as if that job is your only source of income. This can put you in a lower tax bracket per job, but your total combined income may push you into a higher tax bracket overall. Side gigs typically do not withhold taxes at all, leaving the responsibility entirely up to you.
How to fix it:
When your income from multiple jobs adds up, it could push you into a higher tax bracket. That doesn’t mean all your income is taxed at that higher rate, but it does affect the portion of your income above the threshold.
For example, if one job earns you $35,000 and your second job brings in $25,000, your total income is $60,000. That combined total could place part of your income into the next tax bracket, increasing your overall tax liability.
Tip: Don’t assume each job’s individual salary determines your tax rate. Always look at your total income to understand your actual tax bracket.
If any of your income is from self-employment or gig work, you can take advantage of business-related tax deductions that help reduce your taxable income.
Some common deductions include:
You’ll need to file Schedule C with your tax return to report business income and expenses. Keep receipts and records to support any deductions in case of an audit.
Bonus: Even part-time freelance or contract work qualifies for deductions—as long as the expenses are ordinary and necessary for the work you do.
When you earn money as a freelancer or independent contractor, you’re considered self-employed. This means you’re responsible for both the employer and employee portions of Social Security and Medicare taxes - known as self-employment tax, currently 15.3%.
This is calculated on net earnings (income minus expenses) and reported on Schedule SE.
Tip: If you're earning significant gig or freelance income, set aside around 25-30% of it for federal taxes, including self-employment tax. This prevents an unpleasant surprise when taxes are due.
If you’re married and one or both of you have multiple jobs, your filing status can impact your tax liability. Most couples benefit from filing jointly, as it often comes with higher income thresholds for tax brackets and access to more deductions.
However, if one spouse has significantly higher income or complex tax circumstances, it might be worth comparing the results of both married filing jointly and married filing separately to see which yields a better outcome.
Working multiple jobs doesn’t automatically disqualify you from tax credits. In fact, depending on your total income and filing status, you may still be eligible for valuable credits like:
These credits can significantly reduce your tax bill or increase your refund, so it’s worth reviewing eligibility carefully or consulting a tax professional.
Working multiple jobs can make your tax situation more complex than a single W-2 job. While many people successfully use tax software, there are times when it’s best to work with a tax professional:
Tax professionals can help you strategize not just for this year’s taxes but also for future financial planning, especially if you plan to continue balancing multiple income streams.
Working multiple jobs can be a great way to increase your income, gain experience, or explore different career paths. But when it comes to taxes, it requires careful planning to avoid surprises and make the most of your earnings. From understanding how your income is taxed to tracking expenses and adjusting your withholdings, a little proactive effort throughout the year can make a big difference come tax time.
Whether you’re doing it out of passion, necessity, or ambition—make sure your tax strategy works as hard as you do.
