Working in the Gig Economy: Taxes on Self-Employment

Many military spouses — and even some service members — have started a business or side job in today’s gig economy. And being your own employer means you are responsible for additional taxes and tax reporting.

Read on to learn the basics of self-employment taxes.

Schedule C and tax filing

In most cases, self-employment income and expenses are reported on a Schedule C. The net profit, after expenses, of Schedule C income is then reported on your federal tax return. It is the responsibility of the taxpayer to keep track of all their sources of income, even if the source does not report it to you or to the IRS.

Self-employment tax

In addition to regular income taxes on your profits, you’ll also be subject to the self-employment tax. This is the Social Security and Medicare tax paid by those who are not employed by someone else. Anyone who has total self-employment income in excess of $400 per year is required to file a Schedule SE and pay self-employment taxes.

State tax filing

Military spouses may report self-employment income just like their regular income on their federal tax return. Each state has its own rules on how military spouse self-employment income is taxed. Check with the state or contact a Military OneSource tax consultant.

Non-military income of active-duty service members is not protected under the Servicemembers Civil Relief Act, and service members with income from sources other than the military must file with the state in which the income is earned.

Self-employment can bring tax questions. Military OneSource MilTax offers free online tax preparation and e-filing software, as well as free telephone consultations with a tax professional who understands the special needs of military families. With MilTax, there are no hidden surprises.

Schedule an appointment to speak with a MilTax consultant or financial counselor by calling 800-342-9647, or by starting a live chat. OCONUS/International? View calling options.