Tutor Tax Tips

DISCLAIMER:  I have to make sure that you know I am no way a tax professional!  You should read my information and check it all out with someone who is a professional.  That's why I read Nikki Hughes book, "Your Blogging Business:  Tax Talk and Tips from a Bookkeeper turned Blogger".  She's a professional and helped me to understand how to claim all the random income I have received this year.

With that being said....let's talk about those taxes that are coming due this April.  Hopefully you have done a nice job keeping your tutor business income and your regular house income separate.  If not, stay tuned for tomorrow's post about budgeting/tracking expenses.

Income: 

Having a separate bank account makes it a whole lot easier for a tax consultant or bookkeeper to help you in the tax season.  It also makes the picture a whole lot clearer when claiming your income.  If you didn't keep a separate account this year, promise you will start with one right now for the upcoming  year.

Expenses:

As a small business, you can write off certain expenses for tutoring.  If you have an office space that you use exclusively for tutoring, you can write off the square footage in your taxes.  The office can't be shared with anyone else in your home or a space used for another purpose such as eating dinner at a dining room table.  {Oh Shoot!}

There are other things that you can deduct for expenses.  There is a detailed way you can find you Business Use of Home (BUOH), but it is a little complicated and I will leave it to Nikki in her book (I highly recommend it!).

Here is a little list of common things tutors can claim as an expense:

• Contract Labor (having someone design blog, business card, logos, website)
• Advertisement/Marketing (business cards, carnival supplies, etc)
• Auto (driving to and from tutoring clients homes)
• Subscription Fees (Brain Pop, NCTM,)
• Tutoring Supplies (paper, pencils, crayons, dry erase boards, tutor resources, books)
• Apps (that you use with your students)
• Licenses (like your teaching license or certificate)
• Meals/Treats (if you like to make treats for students at the holidays, only 50% are deductible)

Which Tax Form to Use?

As a tutor, you are most likely a sole proprietor unless you have many tutors working under you are a non-profit tutor.  Basically, by calling yourself a sole proprietor, you are saying that you are self employed.

You'll be filling out a Schedule C form if you are self-employed and make over $400 net profit.  How do you know if you made over $400?  Take all the income from tutoring and subtract all your expenses.  That amount is your net income.

This post is just an overview of taxes for a tutor.  There really are some more things that need attention, which is where I think Nikki's book helps wonderfully.  Although her book is aimed at Bloggers, right in the beginning, she mentions how having a few different income streams can make it tricky (like I do).

"How about this:  You make $200 from tutoring, $300 teaching music lessons and $150 from blogging.  Do you need to file a Schedule C?  The answer is yes (for the most part)."

When you sit down to look at all of your business expenses, you may find that there were more than you thought.  Buying a book about taxes would be an expense and would allow you to write it off.

What tax questions do you have?  I'll do my best to answer any of your questions.  I am a United States citizen, so I won't be too helpful for anything other than that.