How do I report my income for taxes?
As an instructor with ZentasticFit, you are self-employed (that is, you’re an independent business owner, to use the proper tax terminology). You are neither an employee of ZentasticFit nor an independent contractor working for ZentasticFit. ZentasticFit is a marketplace, meaning we are responsible for managing transactions, but do not withhold any taxes from your pay; you are responsible for reporting and paying all applicable state and federal income taxes, self-employment taxes, social security taxes, and all other taxes.
To facilitate the distribution of important tax information and forms, when you first input your payment method, Stripe will collect your relevant tax information (business entity/status, full name, address, and SSN). Instructors who earn more than $600 within one calendar year, will receive a Form 1099-MISC. Stripe will automatically generate and e-file 1099 tax forms in the U.S. and will assess a $2.99 charge (deducted from an Instructor’s final payout at the end of each calendar year) per form e-filed with the IRS.
When it comes time to file your tax returns, you will need to report your earnings from teaching on ZentasticFit as self-employment income. Note that your earnings are different from your payments: earnings are your “gross” income and include all payments made to you by your clients; payments are your “net” income, that is, what is left over from your earnings after platform fees, refunds, etc.
As an independent business owner, you are legally required to pay all applicable taxes. Depending on how much you make, you may be required to make quarterly estimated payments toward your state and federal income tax. Even if you aren’t required to make such payments, it may be wise to do this anyway so that you don’t get caught off guard with having to pay extra taxes when filing your annual tax returns. Filing taxes when you’re self-employed can get complicated; check out the IRS’s page on this topic for help.
But, there’s a bright side: as an independent business owner, you can deduct valid business expenses, and there tend to be a lot of them. This can include things like platform fees, subscriptions to music services, investments you made in technology for conducting classes (microphone, webcam, better computer, etc.), equipment you bought to create a home gym/studio to teach and film from, certification fees, etc. So keep track of what you spend on your business. Every little bit can help.
DISCLAIMER: The information in this article is for instructional purposes only and does not constitute legal advice and should not be substituted for obtaining advice from a tax attorney.