Taxes are not interesting. But they're real, and they can wreck a good year if you're not paying attention.

This article covers the basics of how taxes work for crew members and crew leaders. Your situation may differ based on state, business structure, family circumstances, and other factors.

The big picture

Working as a crew, you'll pay taxes on your earnings. Several types:

Federal income tax. Based on your total annual income. Rates range from 10% to 37% depending on your bracket.

State income tax. Varies wildly. Some states (Texas, Florida, Washington, Tennessee, etc.) have none. Others (California, New York, Hawaii) have rates up to 13%+.

Social Security and Medicare tax (FICA). 7.65% if you're a W-2 employee (employer pays the other 7.65%). 15.3% total if you're self-employed/1099.

The key question that drives everything: are you a W-2 employee or a 1099 contractor?

If you're W-2

The employer withholds taxes from each paycheck, pays half your Social Security and Medicare, and sends you a W-2 by January 31 each year.

Your job: fill out W-4 correctly when you start, save pay stubs, and file Form 1040 by April 15 using the W-2 numbers.

W-2 taxes are simple unless you have side income, multiple jobs, complex deductions, or unusual circumstances.

If you're 1099

The employer pays you the full amount with no withholding and sends you a 1099-NEC by January 31 if they paid you $600+ that year.

Your job: pay your own taxes, file Form 1040 with Schedule C and Schedule SE, and make estimated quarterly payments.

This is where most crew members get tripped up.

Estimated quarterly payments

If you're 1099, you owe taxes 4x a year, not annually. Due dates:

Skip these → IRS penalties and interest.

Setting aside money

Real-world advice: save 25-30% of every 1099 payment for taxes.

That covers federal income tax, self-employment tax (15.3%), state income tax, and a cushion for surprises.

Open a separate savings account. Move 25-30% of every payment there immediately. Don't touch it until quarterly taxes are due.

Deductions

Common deductions for crew work:

Track everything. Save receipts. The IRS can ask for proof up to 3 years.

Crew-specific tax situations

Per-member 1099

Each crew member is treated separately. Each gets their own 1099. Each files their own Schedule C. Simple structure.

Crew as LLC

The LLC files its own tax return. Profits flow through to members based on ownership/agreement. Each member gets a K-1 showing their share. LLCs can elect S-corp status for potential tax savings — talk to an accountant if your LLC nets $80k+/year.

Crew with one leader as sole proprietor

The leader receives all client payments and deducts payments to crew members as subcontractor expenses on Schedule C. Each crew member files their own Schedule C with their portion.

Common tax mistakes crews make

  1. Not saving for taxes. April comes and they have nothing set aside.
  2. Forgetting quarterly payments. IRS penalties + interest = real money.
  3. Mixing personal and business expenses. One account for each, always.
  4. Throwing away receipts. Save them.
  5. Not tracking mileage. Apps like MileIQ track automatically.
  6. DIY first year. First year as a contractor is the hardest. Get help.
  7. Ignoring state taxes. Multi-state especially.

When to absolutely consult a tax professional

A good CPA or EA (Enrolled Agent) costs $200-500/hour. For most crew members, an annual consultation plus return prep is $400-1,500. Saves thousands in taxes and avoids costly mistakes.