What happens when the words the and IRS combine? Theirs. Tax Tips for Musicians.

Posted on Posted in Music Business

Self-employed musicians and freelancers must file taxes. There is no withholding on income. Because of this, some may have to make quarterly tax payments. Surprisingly, many people do not realize the harsh implications from avoiding tax payments. Just look at the trouble Wesley Snipes and Lauryn Hill got into with tax evasion.

Fortunately many expenses are tax-deductible, meaning you subtract these expenses from your income, therefore reducing your taxable income. You are then taxed on the income that remains after the deductions. Don’t be afraid to aggressively pursue these deductions, as this is your money. You won’t go to jail for doing so. The key is to make sure it is business, not personal, related expenses. It helps to be as consistent as possible as well.

Here is a partial list of items deductible. Keep in mind some deductions will need to be prorated according to percentage of business use vs personal use. I welcome any suggestions and addendums.

1.) Website hosting fees

2.) Internet access fees

3.) Digital music subscription services, CDs, iTunes, blank CD’s, blank DVD’s

4.) Online storage fees

5.) Computers and laptops

6.) Computer peripherals (cables, storage devices such as hard drives and thumb drives, routers, earbuds, speakers, monitors, etc.)

7.) Printers, ink cartridges and computer paper

8.) Fax machines

9.) Software (Sibelius, Finale, ProTools, FileMaker Pro, Constant Contact, etc.)

10.) CD player, record player, DVD player, television set (if used for business purposes only)

11.) Office supplies (writing utensils, staplers, folders, binders, etc.)

12.) Furniture, lamps, file cabinets, bookshelves, organization systems

13.) Sheet music, manuscript paper, method books, music books

14.) Music and trade magazine subscriptions

15.) Business postage

16.) Online and print advertising

17.) Promotional materials and printing, preparation costs

18.) Instruments and equipment

19.) Guitar strings

20.) Renters or homeowners insurance

21.) Insurance for equipment and instruments

22.) Repair fees and maintenance for instruments

23.) Subway fare (NYC unlimited and regular metrocards, NJ Transit, Path, LIRR, Amtrak, MetroNorth, etc.)

24.) Airfare, taxi service, gas and toll, rental car, motel, food and various touring expenses (these have special rules and restrictions—consult with a trusted CPA about these)

25.) Meals: business meetings, performance meals, research (clubs and venues)—again, consult with a professional CPA

26.) If applicable, interest on student loans

27.) Union dues

28.) CD production costs

29.) CD manufacturing costs (must be figured on Schedule C as “Inventory-Cost of Goods Sold”) Consult with a professional about this one

30.) License fees

31.) Long distance business phone calls

32.) Hair cuts

33.) Tax preparation fees

34.) Contributions to retirement account that doesn’t have the word “Roth” in front of it

35.) Tithes, special offerings, charitable contributions

Again, items must relate to business only. Do not deduct personal expenses. Just use reason and make sure you are consistent. At the same time, don’t be afraid of the IRS. After all, it’s your money and you want to protect it as much as possible. I recommend to consult a CPA who deals with music professionals who won’t overcharge artists. After all, our ever-changing tax code is very unnecessarily complex and confusing. So, look for ways to minimize your tax burden. At the same time however, never attempt to hide income or falsify records. This is fraud and the IRS will aggressively come after you. Furthermore, just as long as your sincere, honest and ask for advice, you will be fine.

Related links:

IRS Audit Red Flags, Kiplinger.

About Nick Grinlinton

Nick Grinlinton has written 107 entries on this blog.

Nick Grinlinton is a guitarist, composer and educator based in Brooklyn, NY. He is a two-time ASCAP Young Jazz Composer Award finalist and has composed and played music for Jerry Seinfeld's web series "Comedians in Cars Getting Coffee". A speedy runner, Nick currently focuses on racing distances from the mile all the way to the marathon. As he continues to train daily, he is currently examining what effect music has towards running. To learn more and to contact Nick, visit his website.

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