Tax season is upon us. It’s the most wonderful time of the year! Haha, just kidding. Understanding how to file taxes while working with VIPKID is one of the most difficult parts of this job.
Although I’m not a tax professional, this post details everything I have learned from the past two years of working with VIPKID.
*Disclaimer: I am not a tax professional. The following post is based on my knowledge of filing taxes as an independent contractor with VIPKID. I highly recommend consulting a tax professional for more information.
Working As An Independent Contractor With VIPKID
All VIPKID teachers are hired as independent contractors. This means that we are NOT employees of VIPKID and therefore, we are responsible for our own taxes.
And if you’re curious, this is also why VIPKID doesn’t have to promise bookings or set hours to any teacher; we are not employees. In our favor, VIPKID cannot tell us how many hours we need to work. We are able to set our own schedules.
As independent contractors, we will file our taxes differently than if we were to work as an employee. We will also pay less in taxes as independent contractors, so this is a huge plus.
I highly recommend talking to a tax professional about filing your taxes as an independent contractor.
Hiring A CPA For VIPKID Taxes
If you’re anything like me, you despise the thought of filing taxes.
Not only do I hate it because I have to give the government money, but also because it’s so confusing.
When I became a teacher with VIPKID, I decided to hire a CPA to file my taxes for me. Not only did I get to skip the frustrating calculations, but the CPA I hired saved me a LOT of money.
The CPA I work with is actually a part-time VIPKID teacher herself, so she completely understands what’s necessary to file taxes as an independent contractor.
If you want to chat with and hire the same CPA I do, check out her website and reach out to her here: Momen Tax Services. Be sure to tell her Laura Peters sent you!
Filling Out Your W-9 Form
Prior to signing your contract, VIPKID will require that you submit your tax information, which comes in the form of a W-9. Since we are independent contractors, we fill out a W-9 form rather than a W-2.
Before working with VIPKID, I had never filled out a W-9 form. To my surprise, it was pretty similar to a W-2.
They require general information and how you intend to file your taxes (individual, s-corp, trust, etc), along with your social security number.
Does VIPKID Withhold Taxes?
VIPKID is not responsible for withholding taxes from teachers. It is our job to put money aside from each paycheck in order to pay taxes on time.
How much should I put aside from each VIPKID paycheck?
To be safe, I recommend putting aside 25-30% of each VIPKID paycheck for taxes. Although you might not need all of it to cover your taxes, it’s better to be safe.
If you have another job in addition to VIPKID, you might consider having that job withhold more from your paycheck in order to cover the taxes you’ll owe for VIPKID.
Are 1099s Provided?
VIPKID provides each of its teachers a 1099 as long as they’ve made $600 or more for the tax season. VIPKID does an excellent job keeping teachers updated on when they’ll receive their 1099s and how they can access them.
Keep an eye out in your inbox for an email that looks like this for more instructions:
Paying Quarterly Taxes With VIPKID
As independent contracts with VIPKID, it is our responsibility to pay taxes and to pay them on time. Before working for VIPKID, I had no idea that people actually paid quarterly taxes.
Surprise. They do.
If you are issued a 1099 from your company, you will need to pay quarterly taxes or you’ll face penalties. There are some exceptions, however.
If this is your first year as an independent contractor, you won’t need to worry about paying taxes quarterly because the IRS will generally wave the penalties.
In addition, if you make less than $600 from VIPKID for the entire year, you won’t be expected to pay quarterly taxes.
What Costs Can I Deduct From My Taxes?
One of the major benefits of being an independent contractor is being able to deduct business expenses from your taxes.
Keep this in mind when you’re first starting out with VIPKID; you’ll want to keep any relevant receipts for things you’ve bought related to VIPKID.
Here is a list of costs you can write off on your taxes for VIPKID:
– Tech Tools
– Lighting (lamps, selfie rings)
– A portion of your internet bill
– A portion of your cell phone bill (if you use your phone as a hotspot to teach classes)
– A portion of your mortgage or rent for office space
– Anything that was bought to improve your teaching (online classes, TESOL/TEFL certificate cost, etc.)
For more about classroom setup, props, and more, check out our post: VIPKID Classroom Setup.
How To Pay VIPKID Taxes While Living Abroad
It’s no secret that VIPKID is one of the best companies to work for if you want to travel the world. Being able to work from anywhere on Earth as long as you have stable WiFi? Don’t mind if I do!
That brings me to my next point. The teachers that live outside of the USA.. are they required to pay taxes? Again, I’m not an expert on this topic, but I do know a few things that could help answer your questions.
Teachers who live permanently outside of the USA need not pay regular taxes if they are out of the country for 335 days or more per year. This means you are only allowed to stay in the United States for 30 days each year or you will face tax consequences.
You will also need to make less than $105,000 while living outside of the United States to avoid paying regular taxes.
Again, these are things that can be expanded upon by a tax professional. I highly recommend talking to a CPA that has experience with expats.
The Wrap-Up: VIPKID Taxes
There is no definite answer when it comes to paying taxes with VIPKID. The rules are different for each individual teacher and it can be very difficult to understand. I hope this guide gave you some insight into how to pay taxes as an independent contractor.
If you have more questions, I recommend joining the Facebook group: VIPKID- All About Taxes.
Be sure to check out all of our VIPKID resources here: VIPKID Blog.
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