Transitioning from part time teaching to full time

[kateb]

Any advice on making the move from part time evening teaching to full-time-support-myself teaching? My concerns are:

1. health insurance (I am single so I cannot share health insurance with a significant other.)
2. amount needed to sack away for taxes (1/3 of income still?)
3. getting more students

I'd love to hear your experiences with this! Thanks in advance.

(I live in the U.S. so tax question is for other American teachers.)

Kate

[adrienne]

Hi Kate!

I am in a similar situation. I am self-employed (as of January 25th, in fact) as a piano instructor now, and my husband freelances in film and video. Needless to say, no more group health coverage for us! I know that MTNA (www.mtna.org) is offering limited medical coverage to its members, although that won't cover routine office visits. It's basic "catastrophic coverage." Depending on what state you live in, there may be a law that allows several individuals to "associate" for the purpose of health insurance. My husband and I are looking into that -- I'll be happy to pass along any info that might be helpful.

Regarding tax implications: MTNA publishes a useful guide for independent teachers. Not sure HOW helpful, but it comes recommended.

Best wishes in your new venture!  

-- Adrienne

[djar]

Ooooo do I ever know what you are facing!  I made this transition myself a couple of years ago.  For many years I combined part-time teaching (about 12 students) with a full-time job, and just had extra taxes taken out of my main job to cover what I made teaching.  I had to do this for many years since I was a single mom and the level of income and health insurance were paramount.  However, when my son was grown and ready to go to college (thankfully with the help of a trust fund from a relative) I was able to think about doing what I loved most;  teaching piano.   The health insurance issue certainly did weigh on my mind, but you just have to be prepared to bite the bullet and buy your own health insurance.  The younger you are (and healthier) when you do this, the better off you are!  There are some health insurance co-ops a person can belong to, but I only have a smattering of knowledge of these.  I am a Suzuki teacher, and I know insurance is available for Suzuki teachers through the Suzuki Association of the Americas.  Other umbrella groups may have similar plans.  

As I started making the transition  there was one year of working full-time with an increased student load, and then a year of working full-time with a sizeable load;  then I transitioned to part-time work with almost a full load, then transitioned to a full load.

Lucky for me, I remarried during the transition (which was NOT in the plan LOL!) and I am now on my husband's insurance.   So that problem is solved!

You did not say whether you will be teaching in your home or whether you will be employed as a contract worker, or just outright employed.  In my situation I work under contract with an academy and I receive a 1099-MISC from them.  According to the tax web site (I believe it is www.irs.gov) anyone who receives a 1099-MISC is considered to be self-employed and must pay quarterly estimated taxes and Social Security taxes.  However, there is some fine print about the nature of the relationship between the worker and the ones issuing the 1099.  Since my income has been quite a bit less than my husband's until now I have just been reporting my 1099-MISC as "extra income."  However, I am told that as my income has risen to a self-supporting level, I should be filing as self-employed.  This is very disheartening because there is a self-employment tax which will eat up a significant part of my income!  Plus I will have the hassle of filing quarterly estimated taxes and social security taxes.

If you teach in your own home, you may claim part of your home as a deduction.  Be sure and read the rules!  You can't use your home studio for any purpose other than teaching!  I did this for a while, and was able to claim part of my home mortgage interest*, piano payments and part of my utilities as a business expense.  Plus you may be able to depreciate your piano.  The tax laws may have changed since then, so be sure and read up on them or get advice from an expert!  You will need to file quarterly reports and file as self-employed, and pay social security withholdings.

*If you don't have a home mortage you may not have enough deductions to itemize and will need to take the standard deduction.  In this case, I don't think you will be able to claim any business expenses for use of your home.  This is where a tax expert could come in handy.

Hope this helps.  Good luck!