Many retirees do not completely umhlalaphansi. Instead, they take on side hustles like consulting to supplement their Social Security checks and savings.
Kunezinketho eziningi ze-side gig zomuntu osethathe umhlalaphansi, kusukela ekuhlaleni kwesilwane kuya ekubonisaneni kuya emsebenzini wokubhala ozimele. But that extra work can lead to surprise taxes because of how the IRS treats self-employment income.
Why retirees with side hustles owe self-employment tax
Imali oyitholayo emicimbini eminingi, okuhlanganisa ukushayela izinhlelo zokusebenza ezifana ne-Uber, ngokuvamile kuthathwa njengeholo lokuzisebenzela. Izisebenzi ezihola u-$400 noma ngaphezulu wenzuzo yonke ngokuzisebenza kufanele zibike leyo mali kuSheduli SE kanye nembuyiselo yazo yenhlangano. It also applies to people who are already collecting Social Security benefits.
The key difference is that self-employed workers are responsible for paying both employer taxes and employee taxes. In W-2 employment, you pay half of the Social Security and Medicare taxes by withholding the check and your employer pays the other half.
Why does the tax bill sound so high
Ngokuvamile, izisebenzi ezizisebenzelayo zikhokha intela ye-Social Security engu-12.4% kanye nentela ye-Medicare engu-2.9% emalini etholwayo evela emsebenzini wokuzisebenza, ngemva kokulungiswa kwe-IRS okusetshenziselwa ukubala intela yokuzisebenza. Every dollar you earn above the $184,500 limit in 2026 is no longer subject to Social Security taxes. Umkhawulo ofanayo awusebenzi ezintela ze-Medicare, futhi abahola kakhulu bangase bakweleti intela ye-Medicare engu-0.9% eyengeziwe uma izinzuzo zingaphezu kuka-$200,000 kumafayili angawodwana noma u-$250,000 wemibhangqwana eshadile egcwalisa ngokuhlanganyela.
Deductions that can cushion the tax shock
Any documented, necessary and normal business expenses can reduce how much you owe in taxes. If you earn $30,000 from your side hustle and have $10,000 in deductible expenses, your net profit would drop to $20,000.
You can still claim the standard deduction even if you deduct business expenses. Futhi, abakhokhi bentela bangadonsa ingxenye yentela yabo yokuzisebenzela eFomu 1040 lapho bebala isamba semali engenayo elungisiwe. This can lower your taxable income and potentially lower your state and federal income taxes.
You can also pay taxes quarterly, so you don’t have to pay the entire amount in April. Breaking it up into smaller quarterly payments can make it more manageable and can help you avoid penalties.
