Do I have to pay tax on money I earn as a tutor?
You would be required to report it as self-employment income and pay tax accordingly.  It's up to you to keep proper records (like a receipt book, for example), especially when it comes to cash.  If you can't prove exactly how much you earned and the government decides to guess the amount for you then you won't like the outcome! There is a moral and legal obligation to file the earnings. Not doing so is tax fraud. You should keep a ledger or some record of your earnings, helpful guidelines here. Records are required by the CRA: According to the law, your responsibilities include: (source) You could get in trouble if one of your pupils report the expense at their tax filing, and the CRA finds no matching statement on your filing report. Tutoring are eligible for tax credit in case of disability: Tutoring services that are supplementary to the primary education of a person with a learning disability or an impairment in mental functions, and paid to a person in the business of providing these services to individuals who are not related to the person. A medical practitioner must certify in writing that these services are necessary. So if one of your pupils fall under that provision, you will get tax trouble sooner or later. Bottom line: start making records now, and report your earnings. Collect your tax as any lawful citizen is required to.
Of course not. But you walked into this with your eyes open, did you not? Did you think it was going to be 20 min a week or did you know what you were agreeing to?  You are asking to jump your price 300% a day into the work. Your friends are in a tight spot already, there is a time crunch until these tests, and her passing or not has real consequences for her. If it were me it would seem clear you lowballed me to get me to say yes then are leveraging that to a massive price hike assuming I won't want to change tutors once you've started. If we were friends we wouldn't be after this.  Honestly I think your best option is to go to them and apologize. Say you did not understand the commitment you were making and you do not think you are the right person to tutor their daughter. Offer to continue working with her until they find a proper tutor. If they offer more money maybe you can discuss it but don't you bring it up. They may. I'm not sure about in Europe but in the USA even $10/hr is way below average for a private tutor. That's more like prices for a group test prep course. You definitely lowballed yourself on price and the rate you are thinking is probably a reasonable if not discounted one still. If this weren't involving friends you could be more firm on needing to push up the price because if they walk away angry it's just a lost customer. But doing business with friends is always messier.  I could be wrong here, but are you maybe closer to the daughter's age? Are these family friends more accurately your parent's friends? If I'm off on that my advise above stands. If I'm right, think about how your actions will affect the friendship between your parents and this family. Might want to talk with them about it first. "IRAs have huge tax-advantages. You'll pay taxes when you liquidate gold and silver. While volatile, ""the stock market has never produced a loss during any rolling 15-year period (1926-2009)"" [PDF]. This is perhaps the most convincing article for retirement accounts over at I Will Teach You To Be Rich. An IRA is just a container for your money and you may invest the money however you like (cash, stocks, funds, etc). A typical investment is the purchase of stocks, bonds, and/or funds containing either or both. Stocks may pay dividends and bonds pay yields. Transactions of these things trigger capital gains (or losses). This happens if you sell or if the fund manager sells pieces of the fund to buy something in its place (i.e. transactions happen without your decision and high turnover can result in huge capital gains). In a taxable account you will pay taxes on dividends and capital gains. In an IRA you don't ever pay taxes on dividends and capital gains. Over the life of the IRA (30+ years) this can be a huge ton of savings. A traditional IRA is funded with pre-tax money and you only pay tax on the withdrawal. Therefore you get more money upfront to invest and more money compounds into greater amounts faster. A Roth IRA you fund with after-tax dollars, but your withdrawals are tax free. Traditional versus Roth comparison calculator. Here are a bunch more IRA and 401k calculators. Take a look at the IRA tax savings for various amounts compared to the same money in a taxable account. Compounding over time will make you rich and there's your reason for starting young. Increases in the value of gold and silver will never touch compounded gains. So tax savings are a huge reason to stash your money in an IRA. You trade liquidity (having to wait until age 59.5) for a heck of a lot more money. Though isn't it nice to be assured that you will have money when you retire? If you aren't going to earn it then, you'll have to earn it now. If you are going to earn it now, you may as well put it in a place that earns you even more. A traditional IRA has penalties for withdrawing before retirement age. With a Roth you can withdraw the principal at anytime without penalty as long as the account has been open 5 years. A traditional IRA requires you take out a certain amount once you reach retirement. A Roth doesn't, which means you can leave money in the account to grow even more. A Roth can be passed on to a spouse after death, and after the spouse's death onto another beneficiary. more on IRA Required Minimum Distributions." "&gt; A corporation should be taxed based on where it does business and not where the corporate headquarters are located.  But... but.. that's the whole point of the inversions. The US government tries to claim taxes on income from revenue generated overseas. So right now if BK repatariates it's overseas earnings, the US government will double dip beyond it's fair share and tax already taxed revenue just because it was taxed by non-US governments. All BK is doing is moving their headquarters to to a more business friendly economy that doesn't do similar double dipping. That way when they repatriate overseas money they are not being forced to pay taxes unjustly like they would be in the US. They will still pay taxes in the US for earnings in the US, they just won't pay US taxes on earnings foreign earnings.   I don't think you Americans get just how fucked up and hostile your tax structure is. It has nothing to do with ""fair share""." "Close... Warning, I may be off a bit here; I'm sure someone will correct me if so. Traditional 401k or IRA: money goes in pre-tax (so, yes, you avoid paying tax on it now), grows untaxed, taxes are due when you retire and start taking money back out of the account -- but your income, including these withdrawals, is likely to be lower than your peak earning years so your tax rate will be lower. You don't avoid all the tax, but you delay it and hopefully reduce it, and by doing so there's more money in your account earning returns. Roth 401k or IRA: money goes in after taxes (you do pay income tax now). However, all returns on the money are untaxed (I believe), and you pay no tax when you're eligible to withdraw the funds.  Either or both kinds of 401k may be eligible for some percentage of matching funds from your employer (there are some incentives for them to offer this benefit). I believe that even if you're doing a Roth 401k, the matching funds legally have to go in as traditional plan. And yes, as that implies, it is possible to split your contribution between the two styles. Note: the matching funds are ""free money."" If your plan offers a match, it is highly recommended that you contribute enough to your 401k to capture the maximum match." Normally, yes, you would have to pay. If you are in the US, or a citizen of the US, then IRC Sec. 61 would levy tax on all income. Even if you find money on the ground, that will generally be taxable income (the treasure trove doctrine). If you are paying foreign income taxes, the US may allow credit. It's not quite clear what you are asking, so I'll answer a few possible interpretations. Businesses pay taxes on their profits. So if your business took a million pounds in revenue (e.g. sold a million pounds worth of stuff) then you would subtract (roughly speaking) everything the business spent on making and selling that stuff, and pay taxes only on the profit. VAT however is a different matter, and you would have to pay VAT on all of that income (technically the VAT portion isn't even income - it's tax you are forced to collect on behalf of the government). If your business made a million pounds pounds profit, it would pay tax on all of that million (subject to what a tax accountant can do to reduce that, which ought to be considerable).  You can't subtract your personal living expenses like that. However the company can pay you a salary, which counts as an expense and the company doesn't pay tax on that. You might also take some money from the company as dividends. Both salary and dividends count as personal income to yourself, and you will need to pay personal income tax on them.  As for the Ferrari, it depends on whether you can justify it as a business expense. A lot of companies provide cars for their employees so that they can use them for business - however you have to be able to show that IS for business, otherwise they are taxed like salary. The rules for company cars are quite complicated, and you would need an accountant. If this is a real rather than hypothetical situation, definitely get a tax accountant involved. &gt;OK, great, where do I apply for my refund?  An odd question, but I'll answer it if you really don't know.  Tax credits will only likely be a refund if you pay too much tax during the year, otherwise they will be reductions in your yearly tax bill.  In most countries, tax credits are awarded when paying taxes.  Assuming you are from the United States, that would likely be in April on your individual income tax form.  Tax credits can be earned for doing anything the government deems desirable or worthy of exception.  Examples include buying a first house, having children, starting or running a business, paying tuition, adopting a child,  caring for an elderly or disabled person, earning money overseas, paying certain types of medical insurance, and being married in addition to purchasing a zero emission or low emission vehicle. Hi u/Sagiv1,  Short answer: Yes, you do have to pay taxes in Israel for all your worldincome.  Long answer: All countries within the OCDE consider you as a fiscal resident in the country where you spend over half a year in (183 days and up). If you do not spend that much time in any country, there are other tying measures to avoid people not being fiscal residents in any country.  Since you are living in Israel, you will have to pay all your worlwide generated income in Israel, following the tax regulation that is in place there. I am no Isarely Tax Lawyer so I cannot help you there.  Having a lot of business internationally brings other headaches with it. Taking for example the U.S. there is a possibility that they withold taxes in their payments. It is unlikely, though, as they have a Tax Treaty to prevent double taxation. You can ask for this witholded money to be returned from the U.S. or other countries through each country's internal process.  Another thing to take into account is that you can be taxed in other countries for any revenue you generate in said country. This is especially relevant for revenue that comes from Real Estate. The country where the real estate is will tax you in the country and you will have to deduct these taxes paid in your country, Israel in this case. If there is no tax treaty you might possibly be paying twice.  I know you said you do promotion, but I have to warn you about this, because I ignore what other countries tax or do not tax. So been giving more info won't hurt.  If the US is the main and/or only country you will be doing business with, I strongly recommend you real the Tax treaty with lots of love and patience. You can find it here: https://www.irs.gov/pub/irs-trty/israel.pdf or here:  Treaty:http://mfa.gov.il/Style%20Library/AmanotPdf/005118.pdf Amendment: http://mfa.gov.il/Style%20Library/AmanotPdf/005120.pdf  If you are from Israel and prefer it in Hebrew, here are the treaties in your language:  Treaty: http://mfa.gov.il/Style%20Library/AmanotPdf/005119.pdf Amendment: http://mfa.gov.il/Style%20Library/AmanotPdf/005121.pdf   Normally most IRS Departments have sections with very uselful help on these sort of matters. I'd recomment you to take a look at yours.   Last, what I've explained is the normal process that applies almost all over the world. But each country has their own distinctions and you need to look carefully. Take what I said as a starting point and do your own research or ideally try to find a tax consultant/lawyer who helps you.  Best of luck.