A different perspective. Pay as much Self employment tax as you can. The more years you can pay self employment taxes, the less your Social Security will be reduced when you claim your benefits. Translated into English, the more deductions you take now will reduce your later Social Security benefits. Something to consider.
Unless someone who currently teaches in Texas plans to spend a significant number of years employed outside the teaching field, we don't get to claim Social Security. We have to have paid into SS for 40 quarters to claim it, and many of us don't plan on working ten years outside our career field.
Please download the WEP information from the Social Security website. The WEP "penalty" is capped at 50%. 40 quarters has NOTHING to do with claiming Social Security benefits later in life. As always, do not trust someone posting on Yellowboard (including me). Get information from the Social Security people, not here.
I started working in high school, and worked through college. I paid into SS for six years before I started teaching. Getting 40 quarters won't be hard.
You are, for the most part, correct. But there are IIRC three or four districts where teachers do pay into SS, and will be able to claim it once they hit 40 quarters.
You're actually hurting yourself by teaching lessons, if you want every deduction/credit you can get.
Your tax liability is based upon your income, full stop. Anything you do that causes your income to raise could push your tax liability higher. Working as a 1099 contractor (which is what most lesson teachers are classified as) does not in any way absolve you for paying tax on that income.
If you want to LOWER your tax bill, you need to do one of a few things:
1. Cheat on your taxes (don't actually do this).
2. Deduct all mileage on your car as you drive to and from your lesson teaching jobs (for 2020, 57.5 cents a mile)
3. Deduct your maximum charitable contribution for the year (due to changes in how these are calculated, everyone gets a $300 credit for this in the CARES act, even if you only gave $15 - and this includes tithing at church, unless you can document that you gave more)
4. Call a tax preparer or accountant and see if there are other deductions you can take.
5. Claim your home office space at $5 per square foot. However, a couple years back, the credit for costs for maintaining/building a home office was removed from the tax code until 2025. If you used that home office to work from home for your ISD employer, (even during quarantine) AND to teach virtual lessons, you may not be able to claim it. Get a real opinion from a tax specialist.
6. Supplies for your 1099 work - including reeds, oils. You may need to have documentation to support your claim here.
Those are the big ones that usually apply. However, I am not a lawyer or an accountant. This is not financial advice. Contact someone who does this professionally. You have three employers - you should probably pay someone to do your taxes for you, as it's likely not a TurboTax Free level of work to do on your own.
A am not an accountant, don't take the word of an anonymous message board poster as legal advice. If you're getting into filing business taxes, get an accountant (at least for a few years to teach you what you need to know). After paying an accountant for several years I've switched to just using TurboTax (the business version), it walks you through most of what you need to know.
You say that you work for two lesson companies. You need to know if you are an "employee" (you should have received a W-2 form) or a "contractor" (1099 form). If you're an employee, some taxes have already been taken out. As a contractor, you're responsible for all of it.
I don't know of a specific article for lesson teachers, but here's what I've learned from my accountant over the years:
-mileage - your trip from home to the first school, and from last school home, are NOT deductible. The IRS considers that commuting just like anyone who has a job. Any other trips you take during the day for business are deductible - traveling between schools, going to the music store, etc. Keep records. There are little mileage books you can buy, or various apps you can use. There's a way to deduct actual expenses (gas, insurance, maintenance, etc) but unless you have a separate car for business it's easier to claim mileage on your personal car.
-expenses - anything you use for your business is deductible. Reeds, valve oil, music books, TurboTax. If you pay rent for lesson space that's deductible. It's much cleaner and easier if you keep a separate business account. Deposit your income into that account, pay your expenses out of that account. What's left over is your profit (income) that you can then move into your personal account as your paycheck. Keep your receipts.
-home office - look up the rules, but generally if you have a part of your home that's only for your business, you can deduct a percentage of your house expenses. Calculate the square footage of your home office space. If it's 5% of the square footage of your home, then you can deduct 5% of your electric, water, even things like lawn care. If you also use your home office space for non-work things, officially you can't claim it.
-you can't buy yourself lunch and claim it. The lunch rule seems to change every year, just keep in mind it's more about wining and dining clients or throwing an employee party, not about feeding yourself.
-if you go to TMEA or TBA for business, you can claim that as business travel. Again, keep a separate account. Leave enough cushion in there throughout the year to cover your TMEA costs in February. This CAN include food because you're traveling for business.
-tax savings - when you're an employee, your employer takes taxes out every month and sends them to the government on your behalf. There are also some taxes that your employer pays, when you're self-employed you have to pay them yourself. Self-employment tax is EXPENSIVE. I set aside 20% of my income into a savings account for taxes. Once you get over a certain level, the IRS expects you to file quarterly tax estimates. Your last quarterly estimate is like doing your taxes as a regular employee, you finalize the numbers and either pay the balance or get a refund.
-accounting - you should learn and use some kind of software to keep track of your stuff. I've been using the same QuickBooks for 15 years now, it works just fine. I'm sure there are other options out there.
Taxes are a much bigger pain when you're self-employed. Good luck!
deductions are much harder to claim these days and don't trust people that tell you that you can the air you breathe. Go to an actual accountant. IRS is going to be hiring a BUNCH of auditors I would bet and with all the misinformation out there about unemployment etc. get with an expert that has some insurance against an audit. And I hope your private lesson company was holding taxes back for you. Just my opinion.
