A Few Tax Tips for Teachers

Date Posted: 10/19/2010 | Category: Billing

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Wow. Where did 2010 go? Now that fall is here, it won’t be long until the end of the year, and that means, in addition to all the upcoming holiday traditions, it will soon be time to prepare our income taxes.

This process is quite a bit different for independent music teachers, because we don’t get a convenient W-2 form from an employer that itemizes how much we made, and how much taxes we paid. Instead, most of us have to sift through bank statements, checkbook registers, accounting software, and piles of receipts to itemize expenses.

Hopefully, during the year, we paid enough on our quarterly estimated taxes to either break even or perhaps even receive that highly coveted tax refund check! To make sure you don’t pay more taxes than necessary, be sure to document all eligible expenses and deductions to reduce your taxable income. The following is a partial list of probable deductions, most of which are pretty standard, while a few others are deductions that many music teachers might forget to include:

List of Possible Tax Deductions

• Costs related to operating your studio (rent, utilities, furniture, etc.)
• Teaching materials and office supplies
• Music Education Courses - Tuition and books
• Industry Association Dues (Except for NAMTA since we are FREE!
• Telephone / fax and Internet services
• Gas and vehicle repairs (if you travel to your students to provide lessons)
• Advertising expenses
• Accounting / tax preparation fees
• Purchase of instruments, equipment and/or their maintenance and repair
• Interest paid on business loans or credit lines
• Car and Business Liability Insurance
• Music Events/ Concerts

Remember, if you have any extra cash on hand, you will more than likely be able to reduce your taxes by making a contribution to your Individual Retirement Account or Self-Employed Pension (SEP) account.   Any financial counselor will tell you that it’s a great idea to get into the routine of making an IRA contribution every year, especially for those of us with no employer sponsored 401(k).

Even if you’re confident that you’ve itemized every possible deduction, it’s usually a good idea to have a professional tax service prepare your state and federal tax returns.  The peace of mind that comes with knowing it was done and filed correctly is worth the extra couple of hundred dollars, which by the way, is tax-deductible.