Need tax advice as a W2 freelance instructor - is my situation complicated?

But if they're bringing their own clients and setting their own rates, shouldn't they actually be classified as 1099? Sounds like the facility is misclassifying them to avoid paying employer taxes?

You raise a good point. The IRS has specific criteria for determining proper worker classification. The ability to set your own rates and bring your own clients does suggest independent contractor status. Other factors include how much control the facility has over when and how you perform the work. If you believe you're misclassified, you could discuss this with the facility. They might be unaware of the proper classification rules or might have concerns about liability. Sometimes facilities misclassify workers unintentionally, but it could be worth a conversation since proper classification would allow you to deduct those business expenses.

How exactly does that work? Does it actually look at your specific documents or is it just generalized advice based on what you tell it?

I'm curious - did it actually help you save money compared to just using TurboTax or something? I've been skeptical of these AI tax tools.

It actually reviewed my specific documentation and pay structure. You upload your documents, and it analyzes everything including your pay statements, receipts, and tax forms. It's much more personalized than just inputting information into a form. It definitely saved me money compared to typical tax software. In my case, it identified that I was misclassified and showed me how to properly document that with the IRS, which allowed me to deduct about $1,200 in business expenses that I wouldn't have known I could claim. The specialized knowledge made a big difference for my particular situation.

Wait, is this for real? The IRS phone system is notoriously impossible to get through. How does this actually work?

Sounds like a scam tbh. Nobody can magically get you through to the IRS faster than anyone else. They have that phone tree system specifically to handle calls in order.

It's completely legitimate - it uses a combination of automated dialing systems and virtual queuing. Basically, the service continuously calls the IRS using their phone system algorithms and holds your place in line, then calls you once they get through to a representative. It doesn't skip the line, it just handles the waiting for you. They're an established service that's been covered by legitimate news outlets. I was initially going to handle the classification issue myself but kept getting disconnected after waiting on hold for hours. This just made the process manageable.

Thanks for the advice! Can I actually file a Schedule C even if I'm getting a W2? And would an LLC make sense if the facility is already withholding taxes?

You generally can't file a Schedule C for income reported on a W2, as the IRS considers this employee income, not self-employment income. Filing a Schedule C for your W2 wages would likely trigger an audit flag. For your second question, an LLC wouldn't help much with your tax situation if you're being paid as a W2 employee. The LLC would be effective if you were properly classified as an independent contractor receiving 1099 income. Your focus should really be on addressing the classification issue first, as that's the root of your tax deduction problems.

I did this for my job as a martial arts instructor. It took about 6 months but the IRS determined I was misclassified and I was able to file as self-employed, which saved me thousands in deductions.

This is actually a really important point! When I switched from W2 to 1099 for my coaching job, I was excited about the deductions but then got hit with that self-employment tax. Wasn't prepared for it.

I hadn't even thought about that aspect. My last pay stub shows I'm paying about 7.65% for Social Security and Medicare combined. So I'd basically be paying double that as a 1099? That definitely changes the math on whether pushing for reclassification makes sense. I'll need to calculate if the deductions would offset that extra cost.