Moonlighting: What it Means for Your Taxes


The information in this article is up to date through tax year 2019 (taxes filed in 2020). 

Turning a hobby into income sounds like a great idea to many people. Working a night shift at a premium rate to pad your wallet with extra cash also sounds appealing. That is why moonlighting is on the rise. 

What is moonlighting?

In short, moonlighting means that you work a day job and then have a secondary job, traditionally worked at night. However, with the rise in people participating in the gig economy, moonlighting occurs at all times of the day now.  

What are some examples of moonlighting?

When you moonlight, you work at night for extra money in addition to working during the day as a regular employee. This kind of extra work is typical for people who freelance or work in the medical field. 

Medical professionals (doctors, nurses, and physician assistants) can opt to work an extra shift, usually overnight, for double or triple pay. This is common especially among medical residents who are trying to pay off their medical school loans.  

Freelancers, who fall in the moonlighting category, are expected to make up half the American workforce in the next decade. This group is redefining the term moonlighting, because they can work any time during the day – on their lunch break, before work, or after work. This is because their work is usually more mobile than a medical professional. 

How are moonlighters paid?

Moonlighting contracts are typically paid through Form 1099. This means that when you are paid after a moonlighting shift, you will receive the whole amount for your shift. No taxes will be withheld. 

Are moonlighters self-employed?

Yes, moonlighters who are picking up extra shifts or working a side gig are technically self-employed because they are paid with Form 1099 MISC. 

How does moonlighting affect my taxes?

Being self-employed is different from being a traditional employee who receives a W-2. For example, someone who is self-employed is responsible for paying all their taxes. This includes federal, state, Social Security, and Medicare taxes. A traditional employee shares that responsibility with their employer.  

An important thing to note is that if you owe more than $1,000 on your tax return, you will be penalized for underpaying your taxes. If you make significant income as a moonlighter, you should make quarterly estimated tax payments. When you get paid, set aside a portion of your wages to cover these taxes. You can base this amount on your expected tax rate for the upcoming year. 

Should moonlighters track their expenses?

Being a moonlighter and self-employed means that you could deduct some business-related expenses. But you must keep accurate records and receipts to back up your claims. These expenses could include mileage, insurance, supplies, professional education, and more 

How to file taxes as a moonlighter

  1. Report all your income on your tax return from your primary job(s) and any secondary jobs.   
  2. Keep your tax docs in a safe place until you’re ready to e-file your tax return. In January, you should receive a W-2 from any employers and a 1099-MISC for any side work where you earned $400 or more.  
  3. Pay quarterly estimated taxes for the self-employed. 
  4. Keep accurate records and receipts to track your business expenses. 
  5. Choose a software—like TaxSlayer’s Self-Employed—that guides you through your tax return and guarantees your maximum refund.   

This article is intended to provide general information to the public and does not provide personalized tax, investment, legal, or business advice. You should seek the assistance of a professional for advice on taxes, investments, and any other financial, legal, or business matter pertinent to your individual situation.