Do I Need to File Taxes If I Tutor?

Many individuals assume income not reported on a W-2 is untaxed. However, all income, including tutoring earnings, is generally taxable by the IRS. This applies regardless of the amount or payment method, whether cash, checks, or digital payments.

Determining Your Tax Obligations as a Tutor

A tutor’s tax obligations largely depend on their classification for tax purposes. Most independent tutors are considered self-employed, rather than employees. An individual is generally an employee if the person who pays them has the right to control what work will be done and how it will be done. In contrast, self-employed individuals control their own work and how it is performed.

Being self-employed means you are responsible for paying both income tax and self-employment tax. Self-employment tax covers Social Security and Medicare taxes, which are typically withheld from an employee’s paycheck. For self-employed individuals, the self-employment tax rate is 15.3% on net earnings, consisting of 12.4% for Social Security and 2.9% for Medicare.

For 2024, the Social Security portion of the tax applies to the first $168,600 of net earnings, while the Medicare portion applies to all net earnings. For 2025, the Social Security wage base increases to $176,100. You are generally required to pay self-employment tax if your net earnings from self-employment are $400 or more. One-half of your self-employment tax can be deducted when calculating your adjusted gross income.

Gathering Your Financial Information

Accurate record-keeping is fundamental for self-employed tutors. Track all income received throughout the year, regardless of payment method, including cash, check, direct deposit, or third-party apps. Maintain a detailed log of dates, amounts, and income sources for tax reporting.

In addition to income, tracking deductible expenses is important for reducing your taxable income. Common business expenses for tutors can include the cost of educational supplies such as books, stationery, and other teaching materials. Travel expenses, like mileage incurred for commuting to students’ homes, are also deductible. If a dedicated area of your home is used exclusively and regularly for your tutoring business, you may be able to claim a home office deduction.

The home office deduction can be calculated using either a regular method (based on the percentage of your home used for business) or a simplified method ($5 per square foot for up to 300 square feet, max $1,500). Other deductible expenses include professional development courses, advertising, and educational software subscriptions. Keep all receipts, invoices, and documentation for income and expenses to substantiate tax return claims.

Reporting Your Tutoring Income and Expenses

After gathering financial information, report your tutoring income and expenses to the IRS. Self-employed individuals use specific tax forms submitted with their annual income tax return. The main form for reporting business profit or loss, like tutoring, is Schedule C (Form 1040).

On Schedule C, you will report your gross receipts or sales from tutoring services and then list your various business expenses. The net profit or loss calculated on Schedule C is then transferred to your main income tax return, Form 1040. This net profit is what the IRS uses to determine your income tax liability and also serves as the basis for calculating your self-employment tax.

To calculate your self-employment tax, you will use Schedule SE (Form 1040), Self-Employment Tax. The net profit from your Schedule C flows to Schedule SE, where the Social Security and Medicare tax liability is determined. The amount of self-employment tax calculated on Schedule SE is then reported on your Form 1040, contributing to your overall tax due.

Understanding Estimated Tax Payments

Since taxes are not withheld from self-employment income, tutors are required to pay estimated taxes throughout the year. This ensures tax obligations are met as income is earned, avoiding a large tax bill later. Make estimated tax payments if you expect to owe at least $1,000 in tax after subtracting withholding and refundable credits.

Estimated taxes cover income tax, self-employment tax, and other applicable taxes. Use the worksheets with Form 1040-ES to project your income, deductions, and credits for the year. The tax year is divided into four payment periods with specific quarterly due dates: April 15, June 15, September 15, and January 15 of the following year.

Payments can be made through various methods, including online via IRS Direct Pay, the IRS2Go app, or the Electronic Federal Tax Payment System (EFTPS). You can also mail your payments with a payment voucher from Form 1040-ES. Failing to pay enough tax throughout the year through estimated payments or withholding can result in penalties for underpayment. The penalty calculation considers the amount of underpayment and the period it remained unpaid, with interest rates set quarterly by the IRS.