Is a side hustle like Uber Eats worth it in a high tax bracket?

Thanks for explaining. So if I'm understanding right, I'd be paying both the 32% income tax PLUS another 15.3% self-employment tax on whatever I make from Uber Eats? That sounds like almost half would go to taxes! But the mileage deduction might help offset some of that?

The 32% would apply to your profit after expenses, not your gross earnings. So if you earn $400 a week and have $150 in mileage and other deductions, you'd pay income tax on just $250. For self-employment tax, you do pay 15.3% on your net earnings, but half of that amount becomes a deduction on your income taxes. So it's not quite as bad as paying a full 47.3% combined rate. Most rideshare/delivery drivers find they can deduct a significant portion of their earnings through proper expense tracking.

How does it compare to something like turbotax self-employed? I've been using that but honestly find it confusing when dealing with both W2 and 1099 income.

Does it actually help with planning beforehand? Like could I use it to figure out if a side hustle makes sense BEFORE I start driving for uber eats? I'm in a similar situation to OP and don't want to waste my time if I'll only keep 50% of what I make.

It's way more intuitive than TurboTax in my experience. What I like is that it's designed specifically for people with mixed income sources. It clearly separates your W-2 and 1099 incomes but shows you the overall tax picture. The interface is much cleaner and doesn't ask you a million questions. As for planning ahead, absolutely! There's a tax planning feature where you can simulate adding different amounts of 1099 income to see exactly how it affects your overall tax situation. You can play with different expense scenarios too. I used this to figure out how much photography work I'd need to do to make it worthwhile after accounting for taxes.

Wait, what is this service? They somehow get you to the front of the IRS phone queue? How is that even possible? Sounds kinda sketchy tbh.

I've seen this mentioned before but it sounds like BS. The IRS phone system is notoriously terrible and backed up. There's no way some service can magically get you through when millions of others are waiting.

It's not about getting to the "front of the queue" - they use an automated system that continually calls the IRS for you and navigates the initial menu options. When a spot opens up, it connects you directly. You don't have to sit there redialing for hours. It's completely legitimate - they don't have special access to the IRS or anything. They're just using technology to handle the frustrating part of constantly redialing and waiting on hold. When they get through, you get a call connecting you directly to the IRS agent. The IRS has no idea you used a service to get through.

Wait, I can open a separate retirement account just for my side gig? Even if I already have a 401k with my main employer? How much could I potentially contribute?

Yes, you absolutely can have a separate retirement account for your self-employment income even while contributing to an employer 401k. The limits get a bit complicated, but here's the gist: For a Solo 401k, you can contribute as both the "employee" and the "employer." The employee contribution shares the same annual limit as your regular job 401k (which is $22,500 for 2023 plus $7,500 catch-up if you're over 50). So if you're already maxing out your work 401k, you can't contribute more as an "employee." But you can still contribute as the "employer" - up to 25% of your net self-employment income. For a SEP IRA, you can contribute up to 25% of your net self-employment earnings, up to $66,000 for 2023. This is completely separate from your personal IRA contributions.

I did it for all of 2023 in Chicago. Made about $22/hr before expenses during peak times (dinner rushes and weekends), much less during off-hours. After tracking my mileage and other expenses, my net profit was around $16-17/hr. Then I set aside about 25% for taxes and ended up with around $12-13/hr effectively. Better than nothing but definitely not amazing money for giving up my evenings and weekends. The flexibility was nice though.

This is exactly the kind of detailed breakdown I was looking for! The math on keeping $150-180 per week after all expenses and taxes actually makes it seem more worthwhile than I initially thought. I was imagining I'd only keep like $100 out of $400 earned. Quick question - you mentioned using a mileage app that automatically tracks delivery trips. Which app do you recommend? I want to make sure I'm capturing every deductible mile since that seems to be the biggest expense deduction for delivery drivers. Also, do you find it's better to focus on one platform (like just DoorDash) or is it worth juggling multiple apps to maximize earnings during your available hours?

For mileage tracking, I use MileIQ - it's pretty reliable at automatically detecting when you're driving and categorizing trips as business vs personal. Stride is another good free option that's popular with gig workers. The key is consistency - pick one app and use it religiously because the IRS wants detailed records if you get audited. As for platforms, I definitely recommend running multiple apps simultaneously. I keep DoorDash, Uber Eats, and Instacart all running during my shifts and take the best orders from whichever platform. This maximizes your hourly earnings since you're not sitting around waiting for orders from just one service. Just make sure your mileage app captures all the driving between different pickups regardless of which platform the order came from. One tip: Instacart orders often pay better per hour but require more time per delivery, while DoorDash/Uber Eats are quicker turnarounds. I usually focus on Instacart during slower periods and switch to the food delivery apps during peak meal times when orders are more frequent.

This is such a valuable perspective that I think gets overlooked in these discussions. You're absolutely right about the opportunity cost analysis - when you're already earning enough to be in the 32% bracket, your time becomes pretty valuable. I'm actually in a similar situation and was considering rideshare driving, but when I ran the numbers like you described, I realized I could probably make more money by picking up freelance work in my actual field (software development) even if I only did a few hours per month. Plus that work would be more intellectually stimulating and potentially lead to better networking opportunities. The wear and tear on your car is definitely a hidden cost too. I hadn't really thought about how all those extra miles and stop-and-go city driving would affect maintenance schedules and resale value. That could easily eat into the already thin margins even more. Maybe the sweet spot is doing gig work temporarily for a specific goal (like saving for a vacation or paying off a debt) rather than as a long-term income strategy when you're already earning well from your primary career.