Kim Menke, owner of Jim’s Tax Service in Marion, knows a thing or two about “side hustles.”
As a tax preparer, she’s worked with clients who do all types of freelance work, often in addition to working full-time jobs. Writers, graphic designers and Uber drivers have all sought her tax expertise. Plus, the family business started out as a side hustle of sorts.
Her father, Jim Menke, founded Jim’s Tax Service out of his house in 1975 while he was working full-time at Rockwell Collins (now Collins Aerospace).
“He grew up on a dairy farm with roofing as his side hustle,” Kim Menke said. “He was looking for a new side hustle that wouldn’t be quite so cold.”
After retiring from his full-time job in 1999, he focused on the tax business full-time.
THE FAMILY BUSINESS
Kim Menke, 49, didn’t originally intend to take over the business.
She worked as a high school English teacher and at Half Price Books for many years before she began helping her dad. Working at Jim’s Tax Service became her side hustle until she decided to commit full-time, ultimately earning a second degree in accounting and buying the business in 2016.
Her dad still helps out, especially during tax season.
She spoke at a recent virtual event organized by the city of Marion called “Geek Out About … Taxes,” which focused on tax planning for side hustles. Her biggest piece of advice for freelancers is to get excited about organizing.
“Don’t wait until it’s time to file your return to find all of your records. Keep detailed records throughout the year,” she said.
Menke prefers using a physical planner but has clients who use apps to track their mileage and expenses — something they can write off as a freelancer.
Other potential write-offs include the use of a home office (if it’s exclusively used for the freelance business) and a portion of your cellphone bill. Supplies that are used exclusively for the business, like paper and office supplies, also can be written off, but only if you keep track of them.
Of course, you’ll also pay more in taxes as a freelancer.
“As a general rule, you’ll pay 30 percent in taxes between federal, state and self-employment tax,” she said.
Some of her clients bank 30 percent of their side hustle income throughout the year. Menke said making quarterly payments is important for freelancers so they aren’t hit with a big tax bill (and possible penalties) every April.
QUESTIONS ABOUT WFH
Lately, she’s been hearing a lot of questions about what can be written off if you’ve been working from home as a regular W2 employee. The answer, in short, is nothing.
“You should check with your employer if you’ve had to furnish your own supplies or ramp up your internet service,” she said.
She estimates about a quarter of her 800 clients have a side hustle in addition to their regular jobs. Menke doesn’t mind the complexity these clients bring. In fact, it’s one of her favorite parts of her job.
“I like taking everything they bring me and organizing it,” she said.
Organization is the key to ensuring clients are taking the right deductions and saving as much money as they can. And that’s what Menke ultimately wants.
After all, she’s got a legacy to maintain.
“It’s a big responsibility to take care of clients who have been coming here for over 40 years,” she said.