Happy Tuesday! September just showed up, and Labor Day weekend is still ahead of us instead of behind us this year. If the long weekend has you thinking about picking up extra income before the holidays sneak up, this week's for you: where to start, how much to squirrel away before the IRS comes looking, and what counts as a "real" business versus a hobby that got a little out of hand. Let's get to it.

Let's get to it.

This week’s lineup:

Picking a freelance platform is less about which one is "best" and more about which one matches your personality. Upwork rewards people who don't mind pitching themselves in a stack of competing proposals. Fiverr rewards people who'd rather build something once and let it find its own buyers. Neither approach is wrong, but the one that fights your instincts is the one you'll stop logging into by March.

👉 Compare your actual take-home across platforms

Upwork: bid for the work. You browse job posts, spend "Connects" to submit proposals, and compete for contracts. As of May 2025, Upwork dropped its old tiered fee structure (20% on your first $500 with a client, down to 5% above $10,000) for a flat-ish variable fee between 0% and 15%, locked in at the proposal stage. Most freelancers report paying around 10%. It rewards persistence and a strong profile more than it rewards being cheap.

Fiverr: let the work find you. You build "gigs" — pre-packaged services at fixed prices — and clients come to you. There's no bidding, no proposals, no Connects. The tradeoff is the commission: a flat 20% off every order, including tips, with zero volume discount no matter how long you've sold on the platform.

A couple of alternatives worth a look:

The tax facts don't change no matter which one you pick. The commission the platform takes is a legitimate business expense — deduct it on Schedule C, don't just treat it as money that vanished. And the platform sending you a 1099-K (or not) has nothing to do with whether the income is taxable. Federal law now requires a 1099-K only once you clear $20,000 and 200 transactions in a year, restored after several years of a much lower threshold nearly took effect. Fall under that number and you likely won't get a form. You'll still owe the tax.

Punch in a project rate and watch each platform's cut disappear right in front of you, ranked from best to worst before you ever submit a proposal.

Good at writing, design, video editing, marketing, or something else people need? Turn those skills into extra income on Fiverr. Create your services, set your prices, and connect with customers looking for exactly what you do.

👉 Start selling on Fiverr

Nobody warns new freelancers about the two-tax problem. There's self-employment tax, and then regular income tax is standing right behind it with its own hand out. Miss that second one and "I've been saving" quietly turns into "I owe how much?" every April, like clockwork.

Why the number is 25–30%, not 15.3%. Take a chunk of freelance income, put 92.35% of it through the 15.3% self-employment tax, then add your income tax bracket on top. For most beginning freelancers, that lands the total somewhere between a quarter and a third of what hits their bank account. Save less than that and you'll be short in April. Save more and you've got a cushion instead of a scramble.

👉 See what 25–30% looks like on your own numbers

The four deadlines that don't wait for you. Once your net self-employment earnings pass $400, you're on the hook for self-employment tax, and once you expect to owe $1,000 or more overall, the IRS wants its money in quarterly installments: April 15, June 15, September 15, and January 15 of the next year. Notice the second period only covers two months (April and May) while the third covers three (June through August) — the calendar isn't evenly split, and neither should your assumptions be.

Safe harbor: the escape hatch if you guess wrong. You don't have to calculate your 2026 tax liability perfectly to avoid a penalty. Pay at least 100% of what you owed last year (110% if your prior-year adjusted gross income was over $150,000), split into four payments, and you're penalty-proof regardless of how this year actually shakes out. It's the easiest safety net available to anyone whose income moves around, which describes basically every freelancer.

Open a separate savings account, move your percentage the day a payment lands, and pretend that money already belongs to the IRS. Because it does.

Drop in your next payment, slide the percentage, and calculate the exact dollar amount to move into savings before you're tempted to spend it.

Most people think a side hustle requires a résumé line — some proof they're qualified before they're allowed to earn anything. It doesn't. It requires an app, a free evening, and something to sell or offer. A few places to start without waiting to feel "ready":

That hobby-versus-business distinction is the one people get wrong most often, and it's expensive to get wrong. If you sell $600 worth of handmade jewelry a couple times a year for fun, with no real effort to turn a profit, the IRS calls that a hobby. You still owe tax on the full $600 — reported as Other Income, not on Schedule C — and you can't deduct your $400 in materials against it, only the direct cost of the goods sold. Cross into "business" territory — regular activity, an intent to profit, decent recordkeeping — and the equation flips: you report on Schedule C, you can deduct ordinary business expenses, but now you owe self-employment tax on the net profit once it passes $400.

👉 Check where your side hustle lands

Neither path lets you skip reporting the income. The only real choice is which form it lands on, and that's decided by how you actually run the thing, not by what you'd prefer to call it.

Six checkboxes, one honest verdict — find out which side of the line your side gig actually falls on before the IRS decides for you.

Everyone assumes their rideshare app is quietly keeping their records for them. One driver found out in Tax Court exactly how expensive that assumption can get.

Semere Hagos drove for Uber in 2014 and filed a Schedule C claiming $44,729 in car and truck expenses, on top of $21,160 in "other expenses" and $5,345 in repairs and maintenance. When the IRS asked him to back up the driving figure, his answer amounted to, “It's a lot, trust me.” He claimed 70,000 miles for the year. The number the court could actually verify, straight from Uber's own trip data, was 9,438 miles — worth $5,286 at the applicable mileage rate.

The IRS didn't zero out his deduction. It allowed the $5,286 Uber's records supported and disallowed the roughly $39,000 gap between that and what he'd claimed. Hagos took it to Tax Court, presumably hoping for a compromise somewhere in the middle.

Why the judge couldn't just split the difference. Tax law does have a mechanism for this exact situation — the Cohan rule, which lets a court estimate an expense even without perfect records, as long as the taxpayer gives it some credible basis to estimate from. Hagos gave the court nothing: no log, no calendar, no pattern of routes, not even a rough explanation for how he'd arrived at 70,000 miles. The opinion is almost sympathetic on this point — the judge notes the court "could make a guess" about additional mileage but that doing so without any foundation "is not appropriate." Estimating in a vacuum isn't generosity, it's fabrication with extra steps, and courts won't do it for you.

The part every rideshare and delivery driver should sit with. Uber, Lyft, DoorDash, and Instacart all track your on-trip mileage automatically, and that number will always undercount your real business driving, because it doesn't include the miles you drive to get into position for your first ride, between drop-offs while waiting for the next ping, or home at the end of a shift. Those miles are legitimately deductible. But the platform will never log them for you, which means the only record that will ever exist is the one you keep yourself.

The IRS didn't punish Hagos for driving for Uber. It punished him for assuming someone else's paperwork was a substitute for his own.

The quick (and slightly prickly) stories we didn’t have time to get to:

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