Help for Instructors

Updated August 10, 2024

Disclaimer: Skyfarer Academy does not provide tax, legal, or accounting advice. This page is intended for informational purposes only and should not be relied upon for tax, legal, or accounting advice. You should consult your own tax, legal, and accounting advisors to inquire about your specific situation.

Taxes are one of life’s inevitabilities, but they don’t have to be overwhelming. While managing taxes as an independent contractor may involve a few more steps than simply filing a wages form, it’s a process you can confidently handle. In this guide, we’ll cover the essentials of filing taxes as an independent contractor, including:

• How to estimate and set aside a portion of your Skyfarer Academy earnings for taxes.
• When to make tax payments throughout the year.
• What deductions you might be eligible to claim as an independent contractor.

We provide an overview of the basic tax filing process for self-employed individuals in the United States. However, we strongly encourage you to investigate the specific tax requirements for your state, region, or country and consult a tax professional to ensure you’re fully prepared before filing.

One of the key differences between filing taxes as an employee and as a self-employed independent contractor is the responsibility of managing your own tax withholdings. As flight instructors teaching on Skyfarer Academy, it’s important to remember that you are considered independent contractors, not employees.

When you're employed by a company, your employer typically handles tax deductions from your paychecks before you receive your earnings. In the U.S., you specify how much to withhold by completing Form W-4 when you’re hired. At the end of the year, your employer provides you with a Form W-2, which details all taxes withheld from your pay.

However, as an independent contractor with Skyfarer Academy, you are responsible for withholding and paying your own taxes, and we won’t be issuing a W-2 form. Instead, if you reside in the U.S. and meet certain income thresholds, you may automatically receive a 1099-K form from Stripe. For income earned in 2024, Stripe will provide this form to anyone who receives more than $5,000 in payouts. If your earnings don’t reach this threshold, you’ll need to request your tax reporting forms from Stripe directly. More information on forms and reporting can be found in our help center. If you’re unsure which forms you need, consulting a tax professional is your best bet.

While there’s no strict rule that says you must immediately set aside taxes from your Skyfarer Academy earnings, it’s highly recommended for several reasons:

• Keeping Your Budget on Track: By estimating your tax liability and setting it aside right away, you avoid the risk of spending money that will be needed come tax time.
• Reducing Tax Season Stress: If you’re used to being an employee and receiving a tax refund each spring, the idea of paying taxes as an independent contractor might feel overwhelming. However, by routinely setting aside estimated tax payments, you can approach tax season with confidence, knowing you’ve planned ahead.
• Building Good Business Habits: Tracking your income and expenses is crucial to your financial success as an independent flight instructor, and staying on top of tax payments is an important part of that.

To determine how much to set aside from each payment you receive from Skyfarer Academy, a good rule of thumb is to allocate about 20-40% of your earnings for taxes. A tax professional can provide a more precise estimate based on your specific financial situation. It’s generally better to set aside a little more than you think you’ll need, and treat any extra as a “tax refund” later on.

Opening a business bank account can also simplify managing your personal and business finances. You can keep your estimated tax funds in your business account and transfer your “take-home pay” to a personal account, ensuring that you’ve allocated enough for business expenses.

Managing Quarterly Taxes

As a flight instructor working as an independent contractor, you may need to pay taxes more frequently than just once a year. Just as employers withhold taxes from employee paychecks to ensure the government gets its share, freelancers and self-employed individuals who earn over a certain amount must also make advance payments. These are known as quarterly or estimated taxes.

If you expect to earn over $1,000 annually from teaching on Skyfarer Academy (or other self-employment income) and you live in the United States, you should pay estimated state and federal taxes every three months. The quarterly tax payment schedule typically follows these dates:

• January 1 to March 31: Taxes due April 15
• April 1 to May 31: Taxes due June 15
• June 1 to August 31: Taxes due September 15
• September 1 to December 31: Taxes due January 15 of the following year

Pro tip: Add these dates to your calendar now to ensure you stay on track with your tax obligations. For any questions about paying quarterly taxes, it’s wise to consult a tax professional.

Estimating Payments

To figure out how much you need to pay each quarter, complete Form 1040-ES or consult a tax professional. You can also pay your estimated federal taxes online at IRS.gov using direct deposit or a credit/debit card. Don’t forget to check your state’s guidelines for filing estimated taxes. When filing your annual taxes, you'll report the quarterly taxes you've already paid.

If you're diligent about setting aside tax money and tracking your income, paying quarterly taxes won’t be too challenging. After going through the process a few times, it will become easier to manage. Remember, penalties can apply for not paying estimated taxes, so if you expect to earn over $1,000 this year, make sure quarterly payments are on your radar or consult your accountant.

Filing Annual Taxes and Taking Deductions

Even if you pay estimated quarterly taxes, you’ll still need to file an annual tax return. The upside? Your annual return allows you to:

• Receive a refund if you’ve overpaid your quarterly taxes.
• Reduce your taxable income by taking deductions available to self-employed individuals.

To report your income from Skyfarer Academy, you'll likely use the 1099-K form provided by Stripe. When preparing your annual return, your tax professional or online tax filing service will guide you through identifying which deductions to take. Some common deductions for flight instructors on Skyfarer Academy include:

• Self-employment tax deduction: If you’ve been paying quarterly taxes, you may be familiar with deducting 50% of your self-employment tax from your estimated earnings. This deduction covers the portion of income tax that an employer would typically pay.
• Health insurance: You may be eligible to deduct your health insurance premiums and some medical costs usually covered by an employer.
• Business expenses: Deductible business expenses can include aviation-related supplies, subscriptions, software, and equipment. You might even be able to take a deduction for a home office if you have a space dedicated to teaching.
• Individual Retirement Plan contributions: As a self-employed individual, you can contribute to a retirement account as both employer and employee, often allowing for higher contribution limits and greater deductions from your taxable income.

Depending on your family, financial, and employment situation, additional deductions may be available. It’s always a good idea to consult a tax advisor to ensure you're maximizing your deductions.

We hope these tips help you feel confident in managing your taxes as a self-employed flight instructor! Skyfarer Academy provides this guide for informational purposes only and encourages you to reach out to a tax professional with any questions.

As your online flight instruction business grows, maintaining good tax habits will allow you to stay focused on what truly matters: delivering outstanding training sessions to your students. For additional resources on managing your business, explore these topics:

• Create a Budget for Your Business: Learn how to track revenue and expenses to achieve your financial goals.
• Search Engine Optimization 101: Help students find your training sessions online by improving your search visibility.
• Instructor Stories: Balancing Flight Instruction with Another Career: Get advice from an instructor on managing an online flight instruction business alongside other professional responsibilities.