What to do with side hustle income
Extra income from freelancing, gig work or a small business is a chance to build a second stream: money that earns money. Three steps keep it simple.
1. Set aside the tax first
Self-employment income usually means estimated tax payments and self-employment tax (IRS Self-Employed Tax Center). Keep that money somewhere safe and liquid until it is due – a Treasury bill or money-market fund that matures before the payment date can earn on it meanwhile.
2. Consider a self-employed retirement plan
SEP IRAs and solo 401(k)s let self-employed people save for retirement with tax benefits (IRS retirement plans for self-employed people).
3. Put the rest to work
IncomeGrid has 40,000+ investment options screened – Treasuries, bonds, funds, REITs and filed offerings – with risk levels 1–5. IncomeGrid ranks every item by yield after tax for where you live: federal, state and each investment type (Treasuries, municipal bonds, corporate bonds, funds, REITs and filed offerings are each taxed differently).
Find where your extra money can earn →
Sources
- IRS – Self-employed individuals tax center
- IRS – Retirement plans for self-employed people
- TreasuryDirect – Treasury bills
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