There’s a lot to be said about working as an independent contractor. Not only are you able to work the jobs and hours that are most convenient — or most desired by — you, but you also enjoy certain perks at tax time. For example, in many cases, you can deduct expenses related to your business, such as transportation and supply fees.
Along with the aforementioned perks, one of the tax responsibilities unique to being an independent contractor is that you’re expected to file quarterly taxes. Here’s a quick, preliminary overview of quarterly taxes for substitute teachers who are independent contractors — and why quarterly taxes are important.
What are Quarterly Taxes?
Quarterly taxes are simply tax payments made every quarter — i.e. four times a year.
If the school or district at which you have been subbing is deducting taxes from your paycheck, relax. You don’t need to worry about paying quarterly taxes.
However, if this is not the case, you will be on the hook for those payments if you meet the following standards:
You will owe over $1,000 after subtracting withholding and refundable tax credits.
Your withholding and tax credits will be less than 90 percent of the prior year’s tax credits.
What? Confused yet?
Basically, if you are an independent contractor and make more than $1,000 — and you do not have another job that withholds taxes –– you must pay quarterly taxes. Generally, if you are self-employed in any way, quarterly taxes are in your future.
Why You Need to Pay Quarterly Taxes
Workers who are classified as employees have taxes withheld from each paycheck by their employer — these funds are then paid automatically to the IRS.
However, as an independent contractor, you must pay your taxes yourself. While you can wait and do this once a year, paying your taxes in April just as you normally would if you worked for someone else, this can get messy.
Depending on how much you make and how much you owe, the government will often charge a penalty on your taxes owed. The amount of this penalty will vary, but you can easily calculate it yourself by filling out this form on the IRS website.
You can avoid this penalty by paying quarterly taxes.
How to Pay Quarterly Taxes
Start by filling out the Estimated Tax Worksheet, available on the IRS website. This will help you figure out how much tax you are on the hook for based on last year’s salary. If you’re using a service like TurboTax to file your taxes for you, they will even do this for you — you just have to check the box to select it as an option.
Once you figure out how much you owe, you will need to mail a check (or pay online) to the IRS four times a year to cover your quarterly taxes. If the date falls on a holiday or weekend, the payment is due the following business day. These are the deadlines (they vary a bit for 2019):
- January 15 (for income received in the prior year September-December)
- April 15 (for income received January 1-March 31)
- June 15 (for income received April 1 – May 31)
- September 15 (for income received June 1-August 31)
Staying on Top of Your Quarterly Taxes as a Substitute Teacher
Try to figure out exactly how much you owe.
What if you don’t know exactly how much your income will be, or if your income wavers at points throughout the year?
You can estimate the amount you’ll owe for the year, and send an equal quarter of that for each payment. For example, if you think you will owe roughly $10,000 for the year, you can send $2,500 each quarter.
This may be a good technique if your income is relatively stable and consistent throughout the year — for example, if you’ve been hired for a long-term subbing position and know exactly how much you will be paid.
Another option is to estimate your liability based on what you’ve already earned this year. This can be tricky, but may be better for people whose income varies. If you don’t know how many or which jobs you’ll have, you can base your payment on what you’ve made that quarter so far.
Use good tax software.
Tax software can help do the math for you — which is good if math is not your strong suit or you’re prone to tax-related panic.
As a teacher, you are entitled to many job-related deductions in certain states — even if you’re not a full-time, salaried employee. While the IRS offers an Educator Expense Deduction, which may or may not be available to you depending on your experience, you can almost always claim expenses that you incurred during your role as an independent contractor — such as those involved in the purchase of classroom supplies.
- Self Employed Individual Tax Center: A one-stop shop on the IRS website that includes forms, advice, and online learning tools.
- 1040-ES Estimated Tax Form: Instructions and form created by the IRS to help individuals pay estimated taxes.
- Schedule C Form: The end-of-year profits and loss tax form.
- Stride Tax App: This free app helps you track mileage and expenses, and it can create an IRS-ready tax summary for when you are ready to file.
- Tax Content Center: Find informative blogs on a range of tax topics.
NOTE: Swing Education and its affiliates do not provide tax, legal, or accounting advice. This material has been prepared for preliminary informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal or accounting advice. You should consult your own tax, legal, and accounting advisors before engaging in any transaction.