Income Tax
Found in: About Business, Accounting
Ruth P., North Carolina
Has anyone discovered any way to (legally!) pay less taxes on piano teaching income?
Mark M., New York
Deduct everything you possibly can. Keep your income in a tax bracket you’re more happy to live with. Have a company put you on payroll. Though that last really doesn’t work much, because the company still needs to pay that extra tax to have you on payroll, so whether it’s self-employment, or employment, or you running an actual business entity, still, the money needs to come in to cover it all. Deductions, deductions, deductions. That’s really where it’s at.
Ruth P., North Carolina
I included royalties, piano tuning, books purchased, etc. Would love to hear any other deductions folks have.
Anne S., Nebraska
If your studio is in your home, you can deduct the cost of utilities for that portion of your home. Any “whole house” improvements can be claimed, and you can deduct the percentage of your studio square footage. Mileage if you drive anywhere on business. Whole house would be a new roof, windows, furnace, etc. Something that improves the entire house, not just one room (unless that room is your studio).
Corinne S., Georgia
Training (any SM modules, etc), licensing.
Heidi M., Canada
Advertising expenses.
Francine V., Australia
Lawnmowing and gardening.
Laurie Richards, Nebraska
If your studio is in your home, you can deduct a portion of your taxes, interest, and utilities. You can also deduct any business-related mileage. Trips to the bank, office supply store, airport if traveling for business, etc. I use my internet connection for my business at home, so I deduct a portion of that.
Bernadette A., California
Just remodeled my bathroom. My students use that so I’m assuming we can deduct part of the remodel?
Laurie Richards, Nebraska
Absolutely. Not all of it, if you also use it outside of your studio.
Jen P., Utah
You can look into changing your business structure from a sole proprietorship (which is filed as a Schedule C along with your personal income taxes) to an LLC. As an LLC you file a business tax return seperate from your personal income taxes and the way the LLC is set up you will end up paying less self employment tax because of how the income is divided and attributed to the partners/owners of the LLC. If you make over a certain amount of money you are better off paying the registration fee and setting up an LLC even if you end up paying the tax guy to file an extra set of tax docs every year. I am still able to also write off business use of home expenses as well.
Megan F., Nebraska
My husband and I are both self-employed, so we set up an S-corp. We also did it for the sole purpose of reducing our taxes. Jen is right – it only makes sense to do this if you make over a certain amount.
Original discussion started March 2, 2018