This Is How Your Side Hustle Will Impact Your Taxes This Year According To An Expert

Here's everything you need to know.👇💰
Managing Editor, Canada

If you’ve found new ways to earn money during the COVID-19 pandemic, you may be wondering “do I need to pay taxes on my side hustle?”

Narcity chatted to Gerry Vittoratos, a national tax specialist at UFile, to find out when a side hustle becomes taxable and how much you might need to return.

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“Every dollar you make in your side hustle must be included on your tax return,” Vittoratos explained.

He noted that, essentially, any side hustle, job or project is potentially taxable “from the first dollar you earn.”

Your tax return must include all and any income you’ve received over the year from all combined sources.

This year in particular, in addition to pandemic-related side hustles, you must you’ve received as income too.

If you earn over the basic personal amount threshold, which is $13,229 for 2020, you’ll need to pay tax on every dollar from there.

However, Vittoratos explained that there are ways for people to reduce the tax they owe.

“Like anything else in life, the simplest solution is usually the most effective,” he said. “Tracking your expenses properly and getting organized with your documents.”

“When it comes to any business, it is crucial to properly archive any documents related to it, more specifically expenses incurred,” he said.

“Without proper archiving and tracking, you will miss out on claiming eligible expenses that will reduce your taxable business income, and consequently your tax bill.”

He said it’s common for self-employed individuals to track their business expenses “improperly,” so he advised investing in good accounting software to help.

  • Managing Editor

    Helena Hanson (she/her) is the Managing Editor of Canada for Narcity and MTL Blog, where she brings her expertise in dreamy, aspirational travel journalism to life. A first-class graduate of Cardiff University's School of Journalism, Helena has a passion for inspiring readers to discover the magic in their own backyards. Originally from the U.K., Helena has spent years uncovering hidden gems and must-see destinations across countries like Sri Lanka, Vietnam, Indonesia, Japan, and more. Having lived in both Canada and Australia, she's become a seasoned expert in off-the-beaten-path adventures and bucket-list experiences that don't break the bank. Whether she's writing about things to do in Ottawa, Montreal, or her favourite spot—Disney World—Helena hopes to leave readers dreaming of their next adventure.

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