Any Accountants on Board

[Townhallsavoy]

I have a taxes question that google is failing to answer for me.

If I teach private guitar lessons as a side income, what percent will be taxed? 

Let's say I make $1000/month.

Does that just add on to my total yearly income, or is it taxed separately? 

[Saniflush]

Just send them all of it. 
Your benevolent government will disburse back out to you what they feel you deserve.

[AWK]

I have a taxes question that google is failing to answer for me.

If I teach private guitar lessons as a side income, what percent will be taxed? 

Let's say I make $1000/month.

Does that just add on to my total yearly income, or is it taxed separately?

I don't know douchebag, maybe you should ask a tax attorney.

It would be Self Employment Income and you are supposed to pay quarterly taxes.  The percentage you would be taxed would depend on the amount you actually make and the number of employees you have.  If you have employees you must pay FUTA (unemployment/payroll) and FICA (Income, Medicare, Social Security). Since you wouldn't have employees, you would only pay FICA.  The IRS asks that you use last years numbers to determine your quarterly payments...but if you do not have numbers from the prior tax year, one must estimate using the tax brackets and corresponding percentages.  Income percentages = Brackets and Medicare/Social Security = Set percentages.  I would recommend not using estimates and just applying the proper percentages to the actual numbers you make quarterly. 

Some people might add it to their income at the end of the year, but it would be characterized by the IRS as self employment.

[GH2001]

I don't know douchebag, maybe you should ask a tax attorney.

It would be Self Employment Income and you are supposed to pay quarterly taxes.  The percentage you would be taxed would depend on the amount you actually make and the number of employees you have.  If you have employees you must pay FUTA (unemployment/payroll) and FICA (Income, Medicare, Social Security). Since you wouldn't have employees, you would only pay FICA.  The IRS asks that you use last years numbers to determine your quarterly payments...but if you do not have numbers from the prior tax year, one must estimate using the tax brackets and corresponding percentages.  I would recommend not using estimates and just applying the proper percentages to the actual numbers you make quarterly. 

Some people might add it to their income at the end of the year, but it would be characterized by the IRS as self employment.

If he is just doing it on the side. Quarterly shouldn't be required unless he's just making huge amounts in his side business. I forget the threshold you need to make that requires the quarterly filing but its not too too low last time I checked. You probably know.

[Snaggletiger]

If you register as an S-Corporation, you could probably take some earned income credit by using accelerated depreciation to offset your capital gains.  However, if you apply the hobby-loss rule and calculate your adjusted basis, it's easy to cover your midmonth convention with the imputed interest.  But make sure and file electronically.



Nerds

[Townhallsavoy]

AWK's answer wins the ability to be comprehended award.  Snaggie, I feel like you spoke Greek to me. 

So if this became full time, I would have to pay taxes quarterly?  What if I owned my own business?  Could I attach my earnings as a teacher to the business?

Or is that exactly what you're telling me to do? 

[AWK]

If he is just doing it on the side. Quarterly shouldn't be required unless he's just making huge amounts in his side business. I forget the threshold you need to make that requires the quarterly filing but its not too too low last time I checked. You probably know.

If you are filing as a sole proprietor, partner, S corporation shareholder, and/or a self-employed individual, you generally have to make estimated tax payments if you expect to owe tax of $1,000 or more when you file your return.

If you are filing as a corporation you generally have to make estimated tax payments for your corporation if you expect it to owe tax of $500 or more when you file its return.

If you had a tax liability for the prior year, you may have to pay estimated tax for the current year.

You must pay quarterly unless the tax amount you owe is less than $1000.  The $1000 amount  includes the amount of tax you owe from your primary income (W-2 employee) as well.  So, he is pretty much going to have to file quarterly. 

[AWK]

AWK's answer wins the ability to be comprehended award.  Snaggie, I feel like you spoke Greek to me. 

So if this became full time, I would have to pay taxes quarterly?  What if I owned my own business?  Could I attach my earnings as a teacher to the business?

Or is that exactly what you're telling me to do?

See above.  Your teaching income and self employment income are two different things.  As a teacher you are a w-2 employee and therefore they withhold for you.  Your income as a guitar lesson provider would be self employment...unless you set up a corporation and make yourself an employee and etc... which is a waste of time unless you plan on making millions.

If it became full time and you owned your own business, the same thing I stated above would hold true.  (unless it was a C-Corp)  You couldn't attach your teaching wages because you are a w-2. 

I'm telling you that you would have to pay quarterly taxes if you made $1000 a month doing guitar lessons.  Unless they are cash transactions...but, um, yeah.

[AWK]

If you register as an S-Corporation, you could probably take some earned income credit by using accelerated depreciation to offset your capital gains.  However, if you apply the hobby-loss rule and calculate your adjusted basis, it's easy to cover your midmonth convention with the imputed interest.  But make sure and file electronically.



Nerds

Your brother in law wants to trade me "pictures" in exchange for legal services, should I accept?

[Snaggletiger]

Your brother in law wants to trade me "pictures" in exchange for legal services, should I accept?

Let's do a like-kind exchange. You bend over and I'll drive you home.

[AWK]

Let's do a like-kind exchange. You bend over and I'll drive you home.

Sold!  You cover the tip.

[chinook]

Sold!  You cover the tip.

i thought he liked full penetration?

[Saniflush]

AWK's answer wins the ability to be comprehended award.  Snaggie, I feel like you spoke Greek to me. 

So if this became full time, I would have to pay taxes quarterly?  What if I owned my own business?  Could I attach my earnings as a teacher to the business?

Or is that exactly what you're telling me to do?

Let me tell you what to do. 
Charge your students 10% less if they pay you in cash money. 
10% more if by check.

[Snaggletiger]

Let me tell you what to do. 
Charge your students 10% less if they pay you in cash money. 
10% more if by check.

This man knows.

[AWK]

Let me tell you what to do. 
Charge your students 10% less if they pay you in cash money. 
10% more if by check.

I can't say that, but yeah.

[Saniflush]

Oh something else. 

If you are renting space to give these lessons make sure you are paying for that in cash as well.  (and ask for a discount)

[AWK]

Oh something else. 

If you are renting space to give these lessons make sure you are paying for that in cash as well.  (and ask for a discount)

Unless you want the deduction... Also, stuff like that is a lot harder to hide for a thousand reasons.

[Saniflush]

Unless you want the deduction... Also, stuff like that is a lot harder to hide for a thousand reasons.

Well obviously but what he is going to get in deduction is probably far less then what they are charge him in taxes for having initiative to earn more money.

[AWK]

Well obviously but what he is going to get in deduction is probably far less then what they are charge him in taxes for having initiative to earn more money.

You can write off the total amount spent on office space.

[Saniflush]

You can write off the total amount spent on office space.

Yes but the question is what does that translate into savings once it has been added into the whole?

I wrote off 10k a couple of years ago for farm repairs.  Doesn't mean I got 10k added to the bottom line.