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Steps to Consider
Keep in mind my thoughts apply to those who are not paid directly through a school as part of an additional stipend if they are already a county employee (e.g., teachers who are also coaches in the same county).
Step 1: File the Schedule C
If you haven't been filing a Schedule C, definitely look into it. Essentially, you are self-employed, or an independent contractor. You make money (however small) by coaching students, and that is income recognized by the government, so that money needs to be reported to the IRS. Chances are your personal expenses are great and your stipend is small, so that will possibly work out in your favor (though not always). If you need to for the first year, seek a professional to do your taxes, then after that year you may be able to do it alone with something like TurboTax.
Keep in mind my thoughts apply to those who are not paid directly through a school as part of an additional stipend if they are already a county employee (e.g., teachers who are also coaches in the same county).
Step 1: File the Schedule C
If you haven't been filing a Schedule C, definitely look into it. Essentially, you are self-employed, or an independent contractor. You make money (however small) by coaching students, and that is income recognized by the government, so that money needs to be reported to the IRS. Chances are your personal expenses are great and your stipend is small, so that will possibly work out in your favor (though not always). If you need to for the first year, seek a professional to do your taxes, then after that year you may be able to do it alone with something like TurboTax.
Step 2: Track Your Income
Some schools/programs may give you a 1099 form that states your income for the year, but if you're like me, you don't make enough at any one program to get those! I have to track exactly how much I get from each gig and I input each line separately depending on the source of income. For example, I work with one independent color guard, one high school color guard, and sometimes I work for a parade production company. Track your income however great or small.
Some schools/programs may give you a 1099 form that states your income for the year, but if you're like me, you don't make enough at any one program to get those! I have to track exactly how much I get from each gig and I input each line separately depending on the source of income. For example, I work with one independent color guard, one high school color guard, and sometimes I work for a parade production company. Track your income however great or small.
Step 3: Save Your Receipts
All of them. If you think it may possibly sort of be deductible, save the receipt and you can decide what you need later.
Step 4: Track Your Travel Expenses
I set up an Excel spreadsheet every calendar year (it's the same year to year with minor tweaks). Here's a screenshot of a template (it's large, but I figured it would be useful!)
There are two main types of expenses, local and non-local (I don't know what else to call that second category), but I don't really bucket my expenses that way since that's not how Schedule C will ask for them. If you have any expenses reimbursed by the individual/program paying you, those are NOT deductible on Schedule C.
Most expenses I track include a date, location, and a description. Here is a list of expense categories I track:
- Travel: flights, taxi's, baggage fees, rental cars, gas for rentals, hotel
- Travel Meals: breakfast, lunch, dinner and snacks for any overnight travel away from your home area (check with IRS but there's a mileage minimum for this, I believe); I use this for my annual trip to WGI Championships in Dayton. IMPORTANT: This is a separate category from Travel because you can only deduct 50% of most of these expenses; TurboTax and other tools calculate this automatically
- Misc Expenses including Professional Development: some instructors get inspiration from art galleries, some from a Broadway show, others attend conferences. If you use anything like that for inspiration for your shows, it's deductible. That doesn't mean every show you go to is deductible, but if it somehow influenced your work in color guard, it is!
- Supplies: In the color guard world, there are supplies like tape and polls that may come out of your own pocket, but don't forget about music that you use in rehearsals. Track each receipt from iTunes or your music provider
- Communications: I am assuming you do not have a dedicated office in your house for color guard (that would follow different guidelines); if you're like me, you use your cell phone a TON for guard (calling/texting staff and members, running GPS to get to competitions, recording/uploading videos/photos to team sites) and so a portion of your cell phone bill is likely deductible
- Mileage: to/from rehearsal, to/from competitions (I keep a single list of locations and miles so I do not have to search for that again year-over-year - see below)
- Car Expenses: I rarely have these, but if you have a car expense directly related to guard, this is the category you'd use
- Tolls: I have to travel on a toll road to get to some local places, but there may also be tolls if you have to travel to a competition farther away
I also saw a great quote that helps explain a bit further what is considered deductible:
"To be deductible, a business expense must be both ordinary and necessary. An ordinary expense is one that is common and accepted in your trade or business. A necessary expense is one that is helpful and appropriate for your trade or business. An expense does not have to be indispensable to be considered necessary. To be deductible for tax purposes, expenses incurred for travel, meals, and entertainment must be ordinary and necessary expenses incurred while carrying on your trade or business. Generally, you also must show that entertainment expenses (including meals) are directly related to, or associated with, the conduct of your trade or business."
Step 5: What if I'm Unpaid?
Let's say you're paid a stipend for a High School guard from August through November for marching band, but then you have a camp in July for which you're not paid. For the time period that you were not being paid, that would be considered a donation of your time and services. And while you cannot actually claim a deduction for the value of your time and services, you can claim a mileage deduction for the miles you drove as a charitable donation expense. Note that the per mile deduction is different for volunteer activities than it is for paid work (I believe $0.14/mile for volunteering, $0.55/mile for paid work).
Step 6: Additional Expense Areas to Consider
For these areas, you'll need to seek out more advice, but it'll get you thinking!
- Depreciation on a computer or cellular telephone required to do your job
- Dues to chambers of commerce, professional societies and unions
- Education that is employment-related
- Home office or part of your home used regularly and exclusively in your work
- Job-search expenses in your present occupation
- Legal fees related to doing or keeping your job
- Licenses and regulatory fees as well as occupational taxes
- Insurance premiums
- Medical examinations required by an employer (our county requires a TB Test)
- Passport for a business trip (this is relevant now for domestic flights if you are from one of the states where TSA will not accept that state's license)
- Subscriptions to professional journals and trade magazines related to your work
- Tools and supplies used in your work (equipment purchased and not reimbursed for)
- Gift expenses related to your work
- Work clothes and uniforms, and their upkeep costs (generally these must be a true uniform or have the employer name on them to count; school logo would constitute uniform)
What Else Do You Know?
Hive mind, I know there are many of you out there who've done this for a long time. Leave comments below with your insights (and we know your comments do not constitute tax or legal advice!) and I can incorporate them into blog updates.
