Why Reporting Extra Income Doesn't Mean Paying Extra Taxes

Taking the Edge from Uncle Sam's Ax

Good old Uncle Sam, it seems his eyes are perpetually focused on your pockets. Every extra dollar or dime he has to know about so he can take his cut. So, what about the tie dyed tee shirts you made just for the fun of it because you found tee shirts on sale at your local discount store? You wore one to the staff summer barbecue and eight co-workers asked you to make one for them. They were actually willing to pay you $15.00 for them. When the word spread around you had orders to make 35 more. How exciting…until you thought about good old Uncle Sam. Does he have to know about that $525.00? 

Maybe you’ve carried a Notary Public license in your pocket for three years. You’ve learned about a lucrative opportunity to make money as a Notary Signing Agent. This is a great opportunity because you can make your own hours which means it doesn’t have to interfere with your regular job. You take a class or two to learn the basics, purchase business cards and send letters to local lenders. Before too long your cell phone is ringing off the hook with calls for your services. By the end of the year you’ve racked up well over $8000.00 dollars in your new venture. But what is that $8000.00 dollars going to do to your overall tax liability? Is Uncle Sam going to eat you up? 

Poor Uncle Sam, he’s really been given a bad rap. He’s not really so bad. Yes, it’s true. The government loves for you to make money; the more money you make the more potential tax to extract from you. But, the government also realizes that it costs money to make money. If you’ve made extra money through your hobby or a side job during the year you needn’t be afraid to declare it on your income tax return. It’s possible that you may be able to have your cake and eat it too…well, at least a slice.