Side Hustle + Salary? Use TaxBuddy to DIY File Without Errors
- Asharam Swain
- Sep 3
- 9 min read
Filing income tax returns can become more complex when your earnings come from multiple sources, such as a regular salary combined with a side hustle or freelance work. For the Financial Year 2024-25, the Indian Income Tax Department requires taxpayers to report all sources of income, ensuring accurate calculation of tax liability. This includes salary income, business or professional income, and any applicable deductions or exemptions. Many individuals with side hustles often overlook this aspect, leading to errors, penalties, or delayed refunds. Understanding how to combine your salary and side hustle income correctly is essential for smooth filing. Platforms like TaxBuddy simplify this process by offering AI-driven, automated, and accurate filing options, ensuring all income sources are accounted for, while providing guidance on applicable deductions, exemptions, and compliance requirements.
Table of Contents:
Understanding Combined Income: Salary + Side Hustle
Combined income refers to the total taxable income from both salary and side earnings, such as freelance work, consulting, or online business revenue. Salary income is straightforward, reflected in your Form 16, whereas side hustle income often comes without formal documentation. This combined income determines your total tax liability and the applicable tax slab. TaxBuddy allows seamless integration of multiple income sources, ensuring proper reporting, TDS matching, and automatic calculation of tax dues. Properly accounting for combined income also ensures accurate claim of deductions like Section 80C investments, expenses related to freelance work, or business deductions for side projects.
Common Challenges in Filing Salary + Side Hustle Returns
Filing Income Tax Returns (ITR) when you have multiple income streams, such as a regular salary and a side hustle, can be complicated. The process involves more than just reporting total income—it requires careful tracking, correct reporting, and adherence to tax laws to avoid mistakes that could lead to penalties or notices.
Income Tracking One of the primary challenges is accurately tracking income from different sources. Side hustle earnings often come through multiple channels—freelance platforms, digital wallets, bank transfers, or even cash payments. Unlike salary income, which is clearly documented through Form 16 provided by the employer, side income may not have formal statements. Aggregating these earnings correctly is crucial to ensure your total taxable income is accurate and no income is left unreported, which could trigger scrutiny from the Income Tax Department.
Expense Deduction Another challenge is determining which expenses related to your side hustle are eligible for deductions. Only expenses that are directly linked to earning the income can be claimed under the Income Tax Act. For instance, office rent, internet charges, software subscriptions, or equipment used exclusively for the side business may be deductible. However, mixing personal and professional expenses or overestimating deductions can lead to rejections or notices.
TDS Mismatches Unlike salaried income, where Tax Deducted at Source (TDS) is routinely reported, side hustle income often does not have TDS deducted. This can lead to mismatches in your ITR if other sources, like bank interest or professional payments, already reflect TDS. These discrepancies must be carefully reconciled; otherwise, the Income Tax Department may flag your return for manual verification, which can delay refunds or trigger queries.
Penalties and Notices Errors in reporting combined income from salary and side hustles can result in penalties, interest on unpaid taxes, or notices under Sections 139(9) or 143(1) of the Income Tax Act. Common mistakes include underreporting side income, claiming disallowed expenses, or filing returns late. Such errors may also affect your refund timeline or require revised returns, causing additional effort and stress.
How TaxBuddy Helps Platforms like TaxBuddy simplify the process by providing structured input fields for multiple income streams. TaxBuddy’s AI-driven solution ensures accurate reporting of salary, side hustle earnings, and eligible deductions. By automatically reconciling TDS, generating error-free computations, and guiding taxpayers step by step, it reduces the risk of mistakes, penalties, and delays in refund processing. With TaxBuddy, filing returns with multiple income streams becomes streamlined, accurate, and hassle-free.
Is Filing DIY with TaxBuddy Safe and Accurate?
Yes, filing your returns with TaxBuddy is both safe and accurate. The platform offers AI-driven automation that validates entries, checks for mismatches in TDS, and calculates tax liability precisely. It allows taxpayers to file self-assisted ITRs without worrying about errors or compliance issues. TaxBuddy also provides a step-by-step process, alerts for missing information, and ensures proper reporting of all income sources, including salary and freelance earnings. With secure encryption protocols, your financial data remains protected, making DIY filing reliable.
How to Claim Side Hustle Deductions in TaxBuddy
TaxBuddy provides an intuitive platform for taxpayers to claim all eligible deductions against income earned from side hustles, freelancing, or other secondary sources. This ensures that your taxable income is accurately calculated while maximizing legitimate deductions. The platform covers multiple categories of deductions:
Business Expenses TaxBuddy allows users to record and claim expenses directly related to side hustle operations. This includes recurring costs such as software subscriptions, internet and data charges, office supplies, co-working space rentals, travel expenses, and other day-to-day costs necessary to run your freelance or part-time business. Proper categorization of these expenses helps in reducing taxable income and ensures compliance with Income Tax rules.
Professional Investments Contributions towards professional development or mandatory statutory funds are eligible for deductions. TaxBuddy enables users to claim deductions for payments like professional membership fees, subscriptions to industry journals, insurance related to your freelance activities, and any mandatory professional fund contributions. By including these expenses, your overall tax liability is minimized.
Depreciation on Assets For side hustles requiring capital assets such as laptops, cameras, recording equipment, or other tools, TaxBuddy allows depreciation to be claimed. The platform automatically calculates depreciation based on usage and applicable tax rules, ensuring that the reduction in taxable income is accurately reflected.
Section 80C, 80D, and 80TTA Deductions TaxBuddy efficiently integrates standard deductions under key sections of the Income Tax Act. Contributions under Section 80C (such as PPF, ELSS, or LIC premiums), health insurance under Section 80D, and savings account interest under Section 80TTA are automatically calculated. The platform also considers combined income from your salary and side hustle to determine the maximum eligible deduction, helping optimize your overall tax liability.
Benefits of Using TaxBuddy By using TaxBuddy for side hustle deductions, taxpayers gain a streamlined, error-free process. The platform ensures compliance, provides an accurate summary of eligible expenses, and simplifies filing without missing any deductions. It eliminates manual calculations, reduces the chances of errors, and helps optimize your tax position efficiently.
Steps to File Your Salary + Side Hustle Return Using TaxBuddy
1. Register/Login To begin, create a new account on TaxBuddy or log in using your existing credentials. The registration process is simple and requires basic personal details such as PAN, mobile number, and email ID. Once logged in, your account provides a personalized dashboard to manage your tax filing process efficiently. TaxBuddy ensures secure access and stores your data safely, making it easy to continue or revise your filing at any stage.
2. Upload Salary Details Next, upload your Form 16, which contains comprehensive details of your salary, allowances, and TDS deductions for the financial year. TaxBuddy automatically extracts and organizes these details, reducing manual errors. You can also cross-check the extracted data against your payslips to ensure accuracy.
3. Input Side Hustle Income For taxpayers earning additional income from freelance work, consultancy, part-time jobs, or online businesses, enter your side hustle earnings in the dedicated section. TaxBuddy allows you to categorize income correctly under the appropriate heads, ensuring compliance with tax regulations for business or professional income.
4. Add Deductions Claim all eligible deductions, including business-related expenses, professional investments, contributions under Section 80C, 80D, 80E, and other applicable exemptions. TaxBuddy provides a guided interface to help identify and claim maximum deductions applicable to your unique financial scenario.
5. Automatic Tax Calculation Once all income and deductions are entered, TaxBuddy calculates your total taxable income and tax liability automatically. The platform also adjusts TDS already deducted from both salary and side hustle income. This ensures that your tax computation is accurate and up to date with the latest Finance Act provisions.
6. Preview and Validate Before filing, review your return in the preview section. TaxBuddy validates your entries, flags any discrepancies or mismatches, and provides corrective suggestions. This step minimizes the chances of errors that could trigger notices from the Income Tax Department and ensures a smooth filing process.
7. File ITR Finally, submit your ITR through TaxBuddy’s secure platform. You can e-verify the return using OTP on Aadhaar, net banking, or other supported verification methods. TaxBuddy ensures the entire process is secure, user-friendly, and compliant with Income Tax Department guidelines.
Why TaxBuddy is Ideal for Side Hustle + Salary Tax Filing
TaxBuddy stands out for combined income filing due to its AI-driven accuracy, user-friendly interface, and real-time guidance. It ensures that both salary and freelance income are reported correctly, deductions are applied optimally, and TDS mismatches are resolved automatically. The platform also provides reminders, notifications for deadlines, and a seamless mobile filing experience. This reduces errors, prevents notices, and helps users claim timely refunds. TaxBuddy’s integration with various financial instruments ensures comprehensive tax management, making it an ideal choice for individuals juggling salary and side hustle incomes.
Conclusion
Filing taxes for combined salary and side hustle income can be challenging, but with the right tools, it becomes manageable. TaxBuddy offers a secure, AI-driven platform that simplifies reporting, ensures accurate deduction claims, and calculates taxes efficiently. For anyone handling multiple income streams, TaxBuddy provides a seamless, reliable, and user-friendly experience. For those looking for assistance in filing salary and side hustle returns, it is highly recommended to download the TaxBuddy mobile app for a simplified, secure, and hassle-free experience.
FAQs
Q1. Does TaxBuddy offer both self-filing and expert-assisted plans for ITR filing, or only expert-assisted options?Â
TaxBuddy provides flexible options to cater to different user needs. You can choose self-filing, where you handle your ITR filing directly using TaxBuddy’s intuitive platform, or opt for expert-assisted filing, where a certified tax professional reviews and files your return. This ensures both convenience and accuracy depending on your comfort level and complexity of income sources.
Q2. Can I report my freelance income without TDS using TaxBuddy?Â
Yes, TaxBuddy allows you to report freelance or side income even if no Tax Deducted at Source (TDS) has been applied. The platform automatically calculates your tax liability based on the declared income and applicable tax slabs, ensuring compliance without missing any dues.
Q3. How do I claim deductions for side hustle expenses?Â
TaxBuddy allows you to enter all business-related expenses for your side hustle or freelance work. It automatically applies eligible deductions under relevant sections like Section 80C, 80D, or business expense allowances. This reduces taxable income accurately and ensures no deduction is missed.
Q4. Is filing salary + side hustle income through TaxBuddy safe?Â
Yes, TaxBuddy ensures high-level security by using encryption protocols and secure servers to protect all sensitive financial data. It guarantees accurate filing while keeping your personal and professional information confidential.
Q5. Does TaxBuddy help with TDS mismatches?Â
Absolutely. TaxBuddy cross-verifies your entries against your Form 26AS and highlights any mismatches between TDS reflected and TDS claimed. This prevents errors during processing and avoids delays in refunds due to discrepancies.
Q6. Can I file my ITR using the TaxBuddy mobile app?Â
Yes, TaxBuddy’s mobile app provides a seamless experience for end-to-end ITR filing. You can report income from salary, side hustles, or business, claim deductions, calculate tax, and file returns directly from your smartphone, making the process fast and user-friendly.
Q7. Are all types of side hustle income supported in TaxBuddy?Â
Yes, TaxBuddy supports a wide range of income sources from side hustles, including freelance work, consulting services, online business income, gig economy earnings, and other professional activities. This ensures accurate reporting regardless of your income type.
Q8. Does TaxBuddy calculate my tax automatically?Â
Yes, once you input all your income and deductions, TaxBuddy automatically computes your tax liability. It considers combined income from salary, freelance work, and other sources while applying the relevant tax slabs and deductions, ensuring accurate tax computation without manual calculations.
Q9. Can I file before TDS credits are reflected?Â
While TaxBuddy allows you to self-calculate entries, it is recommended to wait until TDS credits are updated in the system. Filing after the TDS reflection ensures that your return matches Form 26ASÂ and reduces the risk of discrepancies or processing delays.
Q10. Can I revise my return using TaxBuddy?Â
Yes, TaxBuddy provides an option to file revised returns. If you notice errors, missed deductions, or incorrect entries after filing, you can update your return and submit it within the allowed period, ensuring compliance without penalties.
Q11. Does TaxBuddy provide guidance for new taxpayers with side hustles?Â
Yes, TaxBuddy is beginner-friendly. It offers tutorials, prompts, and step-by-step guidance to help new taxpayers correctly report side hustle or freelance income, claim deductions, and file their ITR accurately without confusion.
Q12. How do I track refund status after filing with TaxBuddy?
TaxBuddy provides real-time updates and alerts on your refund status through the platform and mobile app. You can check if your return has been processed, refunds are credited, or if any action is required, keeping you fully informed throughout the process.
