How do I do my taxes if I'm an independent guitar teacher?

Question

I have gotten quite a few more students and I know that you don't have to file for taxes unless you make over a certain amount per year and I am really getting my lessons going. I teach lessons privately and I want to make sure I don't get in trouble with tax evasion and stuff.

Answer 1

None of the many answers are quite complete.

If you have other income, and have to pay taxes, every dollar needs to be reported.  Use Schedule C or Schedule C-EZ.

Otherwise, if your gross income is more than $400, you'll to need to file tax forms.  You only need pay taxes if your net income is more than $433 ($400 divided by 92.35%).  The self-employment tax is 15.3% of 92.35% of your net income.

If the tax is more than $1000, you may owe underwithholding penalties (essentially interest) on the excess, unless you pay estimated taxes (see form 1040-ES) or have withholding from other activities, such as personally moving an IRA.

Answer 2

Read about self employed (or independent contractor) tax filing and payment of estimated taxes: http://taxipay.blogspot.com/2008/04/tax-...

Answer 3

If your only income is from the lessons and you make less than $400, then and only then do you not have a filing requirement.

If this is your second job, every dollar must be declared.  If your net earnings are more than $400, not only could you owe income tax, but Self Employment tax as well.

Answer 4

You have to file a tax return when your net income from your lessons is $400 or more.  This is because you are required to pay self-employment tax (Social Security and Medicare) even though you may owe no income tax.

Keep records of your income and expenses.  If your net income from your lessons is over $7,000 (and you do not qualify for credits), you may owe enough self-employment tax  ($1,000) to cause you to pay a penalty for underpayment of tax unless you send in payments quarterly to keep your tax owed under $1,000.

You can send in the quarterly payments using Form 1040ES available at irs.gov.

Answer 5

You're right about not having to file if you make under a certain amount per year, but for self-employment that amount is only $400.

You'll show your income and any associated allowable expenses on a schedule C or C-EZ, and fill out a schedule SE and a form 1040.