Almost every kid played some type of sport while growing up. From basketball games to dance practice, sports can be a big part of a kid’s childhood and for most of those kids, receive instruction every week from a coach. Whether a volunteer or a paid employee, coaches play an important role in youth sports.
Did you know there are tax implications related to being a coach? The type of coach you are determines how taxes will affect you. Let’s take a look at some tax tips for different types of coaches.
Different Types of Coaches
There is a distinct difference when it comes to being a volunteer coach of your son’s little league baseball team versus being the varsity head coach at your local high school; this is true when it comes to taxes as well. Each type of coach is treated differently when it comes to taxes. It’s important to know tax guidelines for each category of coach so you can take advantage of every possible tax deduction.
Volunteer Coaches. A lot of coaches are volunteers which means they don’t get paid. This doesn’t mean that you can’t write off some coaching-related expenses. Coaches often pay for equipment, fees, and other miscellaneous expenses throughout the year. If you aren’t reimbursed by your sports organization or league, you may be able to deduct some expenses as charitable contributions.
Here are the criteria for deducting these items:
- Volunteer Coaches must be able to itemize their tax deductions in order to claim coaching-related expenses as charitable contributions.
- The organization you volunteer for must be a qualifying 501(c)(3) nonprofit, tax-exempt organization as recognized by the IRS.
- You can also deduct your sports-related travel at 14 cents per mile driven.
You would only claim charitable deductions if you can itemize your tax deductions rather than take the standard deduction. Volunteer coaching can often be a reward in itself, but if you are spending a lot of money on your team without being reimbursed, it may be worth seeing if you can claim itemized deductions vs. claiming the standard deduction. Don’t worry about figuring this out by yourself, TurboTax will figure out which one (standard vs. itemized) benefits you the most based on your entries.
Paid Coaches (Independent Contractors). Some coaches that work for clubs get paid as independent contractors. Independent contractors are considered self-employed and need to claim the money that they earn. If you earn $600 or more you will receive a Form 1099-Misc at tax time for your work as a coach. Even if you don’t make $600, in general, you are still required to claim your self-employment income. If your net self-employment income is $400 or more, you are required to pay self-employment taxes on that income.
No need to worry about knowing how to track your income and expenses. You can use QuickBooks Self-Employed to easily track your income, expenses, mileage, capture your receipts, and estimate your quarterly taxes year-round. You can then easily export your information to your TurboTax Self-Employed tax return at tax time.
Paid Coaches (Employees). High school football coaches are generally paid by and are employees of the school district. Often, coaches are also teachers in the school system, but that’s not always the case. Some coaches are on what is called a supplemental contract. If you are a coach and receive a W-2 and have taxes withheld, you are an employee.
If you’re a school coach and also an educator, you could qualify for the Educator Expense Deduction. With this, you can deduct up to $250 of expenses for supplies you purchased such as books, equipment, and supplementary materials that you use in the classroom. In order to qualify for the educator expense deduction, you must work for a school at least 900 hours during the academic year. Note that you don’t have to itemize your tax deductions in order to claim the educator expense deduction. You also don’t have to be a teacher to itemize these deductions, but you do need to be an employee of the school.
Don’t worry about knowing these tax rules. TurboTax asks you simple questions about you and gives you the tax deductions and credits you’re eligible for based on your answers. If you have questions, you can connect live via one-way video to a TurboTax Live CPA or Enrolled Agent to get your tax questions answered. TurboTax Live CPAs and Enrolled Agents are available in English and Spanish and can also review, sign, and file your tax return.