Great questions to be asking now.
If you have income that isn't subject to withholding or if the withholding is too low to cover your tax liability, you can pay quarterly estimated taxes. The amount doesn't need to be precise – hence the name “estimated tax” – but you'll want to pay enough to try to avoid an underpayment penalty.
To calculate your estimated taxes, you will add up your total tax liability for the current year—including self-employment tax, individual income tax, and any other taxes—and divide that number by four. NO formal income statement is required. Just your best estimate for the quarter and then you true it up throughout the year. And it's income less all expenses.
The U.S. has a pay-as-you-go system, so you'll need to pay taxes from your side hustle on a quarterly basis. The first quarterly tax deadline for 2023 is April 18. The IRS has a great guide, https://www.irs.gov/pub/irs-pdf/p334.pdf, for all you need to know about filing taxes for your gig work, including a calculator to estimate what you will owe in taxes.
If you earn money for gig work as an independent contractor, you may have to pay quarterly estimated taxes. You can avoid a penalty by paying enough tax on time.
TurboTax has a free tool, the taxcaster that can help you with forecasting.
https://turbotax.intuit.com/tax-tools/calculators/taxcaster/
Best wishes,
teri
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