Tax Time question

iVillage Member
Registered: 07-05-2006
Tax Time question
4
Sun, 01-04-2009 - 1:50pm

Now that tax-time is almost upon us, I'm wondering what kinds of things I can claim as a piano teacher. My problem is this...I've been a piano teacher for a few years now. I have never had that many students until recently. With all of my debt I decided to take lessons more seriously and I've taken on more students. I have 15 students now. This makes me about 214 dollars a week. I want to start getting more serious about claiming this money and taking any deductions I'm able to. What should I do to start? Do I need to create a 'so-called' company? An LLC, or

iVillage Member
Registered: 07-14-2008
Sun, 01-04-2009 - 2:50pm

I don't have much advice for you. I know that in Canada you can claim small business expenses without having a registered company, as long as you just use your name.

I work out of my home, which allows me some tax deductions. I claim a percentage of heat, hydro and water, monthly internet and cell phone. I am not able to claim my car as I get mileage from my employer, but I am sure in your case you would be able to. If you use your vehicle for both personal and professional, you claim a portion for your vehicle upkeep and payments. You can claim anything that you reasonably had to purchase in order to run your business.

You might want to look into laws about collecting taxes. I know in Canada that if you pay the taxes as part of your business, then you can also claim taxes on your business expenses.

If you Google "starting a home business" you will get a lot of information.

Good luck.
Tara






iVillage Member
Registered: 03-07-2007
Sun, 01-04-2009 - 3:57pm

I think you should be fine with a sole proprietorship, which means that you will file Schedule C for business. You do business as your name, and I believe that you can file under your SSN. Then you should be able to claim business income and expenses on the Schedule C. If you use tax software (highly recommended) it will guide you through deducting your eligible car expenses, etc. Since you are a service business, you don't have to worry about collecting any taxes from your students. You are just paying taxes on your income from business. You also usually have to file a return with your city, county, and state, even if it is a zero return. (My taxes for the city and county are always zero since they are collecting sales and use taxes, which you probably won't have either).

If you do this, make sure to keep receipts for EVERYTHING related to your business(stickers, printer paper, magazines you subscribe to related to your industry, etc.). I will advise you that you might want to start carrying a liability umbrella insurance policy, especially if you work with children (I do as well). I have never had anything happen to me, but you want to protect your business and personal assets from any potential lawsuits. I have this coverage from the same company that insures my home and vehicles.

If you google sole proprietorship and schedule C, you should get some relevant information.

Good Luck!

iVillage Member
Registered: 11-17-2007
Sun, 01-04-2009 - 5:17pm

There is a book that was in this movie a couple of weeks ago called something like small business for dummies. You know one of those yellow books. I would check with Barnes and Noble and see what they have that is like that.


But as far as I know it is gas or mileage. I would start figuring out the miles between your house and each of the student's house and write that down. I think business mileage is up to around .50 a mile.


Then you got the sheet music. and all the other things you use to teach a student. The recital you were talking about a few weeks back rental on the hall, cleaning up afterwards that is all deductible and if you had given out prizes them too. I would start as of January 1 keeping a box and putting in all the money you spend on everything for next year. Since you are prepared this year You just might have to do some digging for all the proof you need on the business. I really don't know about the LLC and INC


Also if you need to take classes to keep up that is deductible too and that book I told you get that is too. Magazines for teachers that too. Bookkeeping supplies for the business that too. If you get Quicken for a business that too. Raymond says check the IRA sight for small business forms and dregs too.


iVillage Member
Registered: 03-26-2003
Mon, 01-05-2009 - 5:48am

If you're driving to and from your students' homes, all of that is deductible. You can either take an expense deduction which would be gas, tolls, maintenance on your vehicle (oil changes and the like) or you can take a mileage deduction. I'm not sure what the cents per mile is, something like .29 cents I think. My accountant figures it both ways to see which would be more financially advantageous. You can also deduct any other expenses you incur through your business. Any music you buy, books, copy paper, etc..all of those are deductible.

You don't need to form a corporation, a sole proprietor is perfect and you'll file a Schedule C.

Sue

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