Depending on the state where you substitute teach, you may be working as an independent contractor or as an employee of your substitute company, like Swing. There are some significant differences between the two in the way income is organized, tracked, reported, and paid to the IRS. Here we’re providing a simple overview and several resources that may help clarify the differences when it comes time to file your taxes.

Overview

When you begin earning money as an independent contractor, you essentially become a business-of-one. As an independent contractor, you are paid the full amount listed on the assignments you work, and no taxes are withheld.  

Unfortunately, this does not remove your tax burden. Rather, it means you are required to report your income and pay your taxes directly to the IRS. Generally, you are required to file an annual return and pay estimated tax quarterly.  

Quarterly taxes

If you expect to owe more than $1,000 in taxes for the year for your contracting work, then you may need to pay quarterly taxes. If you don’t pay quarterly when you should, you could face a 6-8% penalty on the amount you underpaid.

Here’s a helpful rundown of quarterly taxes from our partners at Stride Tax.

Deducting expenses

As an independent contractor, you may be able to deduct business-related expenses, such as mileage traveled or school supplies. Here’s a list of common 1099 tax deductions.

Additional resources

• 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.
• The Impact of Tax Reform on Self-Employed Taxpayers: This free webinar includes information on how the new tax law will impact you this tax season.
• 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 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.