Do you have a side hustle? From driving a Lyft to dog-walking, Americans are increasingly looking to pick up some extra cash with a side gig. According to a survey conducted by finder.com, more than 1 in 4 of Americans are earning cash on the side but not declaring it on their tax returns. In terms of dollars, about 69.8 million Americans are failing to report an estimated $214.6 billion to the Internal Revenue Service (IRS) each year.
The biggest offenders? Millennials, according to the survey. When it comes to not declaring the money made on the side, about a third of millennials with a side gig aren’t declaring that income.
You’d think that the reason for not declaring income would be some Les Mis inspired response – something along the lines of "I only did it to feed my family." But the dollars don’t bear that argument out. More than a third (36.3%) of high-income earners – those making between $150,000 and $300,000 – don’t declare their side hustle. That’s more any other income bracket.
On average, those with side gigs made $3,075 of undeclared income per year, according to the survey. Those making the most in their undeclared side gigs? Keystone residents. My own state of Pennsylvania leads the pack with a whopping $5,759, followed by New York, and Florida. By the numbers, however, those in Alabama are more likely not to declare their income, followed by Washington and Illinois.
(It’s worth noting that these are results from a survey where samples are small. You can read more here.)
Side hustles can be a great way to pursue your dream job, save for a fun purchase, or pay off your credit card.
But skipping out on paying taxes? That’s not a great idea. Undeclared income doesn’t count for purposes of earning Social Security later – or making an impact on your credit score. And if you get caught skipping out on your taxes, not only do you have to pay it back, you can get socked with interest and penalties.