Math tutoring side gig: Is it considered a hobby or self-employment business for tax purposes?

Thank you so much for the info! So I should definitely be putting this on Schedule C then. Do I need to worry about quarterly estimated tax payments for 2023 since I didn't make any, or is that something I only need to think about for next year? Also, what kind of deductions can I take as a tutor? I've been using my laptop, buying some materials, and sometimes travel to students' houses.

For 2023, you might face a small penalty for not making quarterly payments, but since this is your first year with this income, it might not be too bad. Moving forward into 2024, you should definitely make quarterly estimated tax payments if you continue tutoring. You can deduct legitimate business expenses like portion of laptop use for tutoring, educational materials purchased for tutoring purposes, mileage driving to students' homes (keep a log!), any online tutoring subscriptions, and even a portion of your cell phone bill if you use it for business. Just make sure to keep good records of all these expenses with receipts. You might also be able to take a home office deduction if you have a dedicated space for tutoring work.

Did you need to provide any documentation to taxr.ai? I'm tutoring too but most of my students pay in cash and I didn't keep great records. I'm worried about claiming deductions without receipts.

I'm kinda skeptical of tax services that promise big savings. How did the audit protection work? Did they actually stand behind their recommendations? Math tutoring seems pretty straightforward tax-wise.

You don't need to provide documentation upfront, but the system does recommend what records you should keep. For cash payments, I started using a simple note app to track each session. For deductions, it's smart to start collecting receipts now, but you can still make reasonable estimates for 2023. The audit protection was something I appreciated for peace of mind, but haven't needed to use. What impressed me wasn't big savings promises, but how it clarified which tutoring expenses were legitimate deductions versus personal expenses. It helped me understand the difference between hobby rules and self-employment rules, which saved me from making costly mistakes.

Wait, so this service gets you through to the actual IRS? How does that even work? I thought it was impossible to reach them, especially during tax season.

Sorry but this sounds like BS. I've tried everything to get through to the IRS last year and nothing worked. You're telling me some random service can magically get me to the front of the line? Yeah right.

Yes, it connects you with the actual IRS. They use a system that automatically navigates the IRS phone tree and waits on hold for you. When an agent comes on the line, you get a call back. It's not about cutting the line - you're still in the queue, but you don't have to personally sit on hold for hours. I was skeptical too! But after spending multiple days trying to get through on my own and failing, I was desperate. The service actually worked exactly as promised. I think they must use some kind of automated system that keeps dialing and navigating the phone tree until it gets through. Not magic, just technology that saves you from the mind-numbing hold music.

I didn't receive any 1099 forms actually. Most of my clients are families who probably don't know they need to send those. A couple of students were referred through a local learning center and they paid me directly, but the center didn't send a 1099 either. Should I be worried about this? Will the IRS think I'm making up income if I report it without 1099s? Or is it worse to not report income that doesn't have 1099s?

You absolutely need to report all income whether you received 1099s or not. The IRS won't think you're making up income - plenty of self-employed people have income without corresponding 1099s. It's actually better to report income the IRS doesn't know about than to not report income they might discover later. For future reference, you might want to provide W-9 forms to clients who pay you more than $600 annually. This reminds them they should be sending you a 1099-NEC. The learning center definitely should have sent one if they paid you over $600, even if clients paid you directly. But ultimately, the responsibility to report all income is yours regardless of whether proper documentation was provided to you.

Ohhh that's really good to know! I'm paying for school partially out of pocket so that could be super helpful. Does tuition I paid in 2023 count for the 2023 tax year, or is it based on when classes actually happen?

Important note: The American Opportunity Credit has an income limit. With $13,500 you're fine, but if tutoring takes off even more, be aware the credit starts phasing out at higher income levels.

This is such great practical advice! I wish someone had told me about the 25-30% rule when I started my own tutoring business. I made the mistake of spending all my tutoring income as I earned it and then got hit with a massive tax bill. The spreadsheet tip is gold too - I started doing this halfway through my first year and it made such a difference. I'd also suggest taking photos of any receipts for tutoring supplies or mileage logs right when you get them. I lost so many deductions because I couldn't find receipts later. One question though - do you report tutoring income as it's earned or when you actually get paid? I have a few families that sometimes pay me a week or two late.