Tutoring Income

• Your tutoring clients probably won’t issue a 1099 declaring their expenses for your services. However, the IRS still requires you to report all income you receive on your Form 1040 on Line 12, business income or loss, using Schedule C or Schedule C-EZ to document your earnings. If you don’t have any employees in your tutoring service, don’t expect to claim any deductions that exceed $5,000 and won’t claim a home-office deduction, you may file the Schedule C-EZ. After tracking your yearly receipts for your services on the Schedule C or C-EZ, transfer that figure to your 1040. This amount is included in your gross income, and you’ll need to pay income taxes on it.
  
  

Self-Employment Taxes

• If your annual net earnings for your tutoring service exceed $400, as of August 2011, you must also pay the self-employment tax on your earnings. Because Social Security and Medicare taxes aren’t withheld from your tutoring earnings – unless you’re a traditional employee – the self-employment tax approximates payroll taxes, including portions of the tax matched by employers in traditional work environments. In addition to income taxes, the IRS assess a 13.3 percent self-employment tax on your tutoring earnings. Even if you only moonlight as a tutor and hold another full- or part-time position, you owe self-employment taxes on your tutoring earnings.
  
  

Mileage Deduction

• If you tutor your clients in their own homes or another location, you may be eligible to make mileage deductions based on the distance you drove while working. While the IRS doesn’t allow you to claim mileage between your home and the first and last places you visit with tutoring clients, you may claim mileage on all trips between clients’ homes. To claim a mileage deduction -- which was worth 55 cents per mile for business purposes as of August 2011 -- keep records of your tutor-related driving, recording the date of your trips, the odometer reading when you start and arrive at each place, and a description of the trip. You may claim transportation deductions on Schedule C or C-EZ.
  
  

Estimated Taxes and Adjusted Withholdings

• When you owe income and self-employment taxes on your tutoring earnings, the IRS requires you to make tax payments based on your estimated earnings, filed quarterly using form 1040-ES. If you prefer, you can adjust your withholding at your full- or part-time position by submitting a new W-4 to your employer, instructing it to withhold an additional amount for FICA and income taxes. Compute your additional withholding by calculating your income and self-employment taxes on your tutoring earnings and dividing that figure by the number of paychecks you receive each year.