What you actually owe, what you can deduct, and why the pro who tracks his parts pays less tax than the one who doesn't. No jargon — just the math.
A customer pays you $700 to swap an alternator. The alternator cost you $400 at the parts counter. You didn't make $700 that day — you made $300, and the IRS sees it the same way.
That's the whole principle of business taxes: you pay on profit, not on what came in. Parts, materials, dump fees, the belt you had to buy on the way — costs of doing the work come off the top before anything gets taxed.
One catch. The IRS doesn't take your word for the $400. No record of the part, and you're paying tax on the full $700 — or guessing on an audit you can't back up. The pros who overpay every April aren't the ones making more money. They're the ones with no records.
Here's the part that trips people up. Since the 2025 law change, Venmo, Cash App, and PayPal only send a 1099-K if your goods-and-services payments cross $20,000 and 200 transactions in a year (a few states set it lower, $600–$1,000). Zelle never sends one at all. So the typical side-job pro gets no tax form from anybody.
The income is still 100% taxable. Cash in hand, a Venmo from the neighbor, a check from the church — all of it. What the higher threshold really means is that nobody is keeping the books for you anymore. If you want credit for your costs, the records are on you.
If you do side work in your own name, you're already a sole proprietor — no LLC required. Come April, the business goes on one form attached to your regular 1040: Schedule C. It boils down to three numbers.
Everything customers paid you this year. Cash, card, Venmo, Zelle, checks — the total that came in.
Parts and materials usually land under "supplies." Tools, business miles, insurance, and software can count too.
What's left is what gets taxed — self-employment tax (15.3%) plus regular income tax at your bracket.
Two thresholds worth knowing: you file Schedule C once net side income passes $400, and if you'll owe $1,000+ for the year, the IRS expects quarterly estimated payments instead of one April surprise.
Same income, same jobs — the only difference is whether you can prove what the work cost you.
Rough estimate for comparison only — it applies self-employment tax (15.3% on 92.35% of profit) plus your bracket to the difference. A real return has more moving parts (SE-tax deduction, QBI, state tax, your other income). Point stands either way: untracked costs are tax you overpay.
SideWRK already makes you keep the exact records taxes run on — not as a chore, just by how the work flows. Every job you log has what the customer paid and what the parts cost you, because that's how you see your real profit on the job. The customer sees $700; you see $300. That private "your cost" line the customer never sees? Come April, it's your deduction record.
Then at tax time, it's one screen. Open Money → Tax wrap-up, pick the year, and everything's already put together:
No shoebox of receipts in the truck. No reconstructing March from your Venmo history. And your SideWRK subscription is a business expense too — worth mentioning to your preparer.
Run the calculator above with your own numbers. For most pros buying real parts, the tax saved by having costs on record covers the subscription several times over. That's not a gimmick — it's just what keeping books does, and SideWRK does it for you while you work.
Estimate, approve, invoice, get paid — and SideWRK quietly keeps the year organized underneath. When tax time comes, it's an export, not a weekend.
Want to see it first? Open the Tax wrap-up in the live demo — a full year of a working operator's books, no sign-up.
SideWRK organizes your own records — it isn't tax advice and it doesn't file anything. Thresholds and rates here are federal, current as of the 2026 tax year, and states vary. A tax professional makes the final call on your situation.