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Tax deductions for musicians , entertainers and performers
 

  As a musician, unless you play music for a company that has you as a regular employee, you are considered “self-employed”. This is almost always the case for giging musicians for tax filing purposes. All music related income such as teaching, studio work, fill in gigs etc. count.

The musician or entertainer or performer normally files the Schedule C with the regular 1040 income tax form. This 1040 is where you have to report the 1099 forms from last year. 1099's have to be sent to you if you earned over $600.00 . If you earned less you still have to report it.

In the past I had a band that earned a large sum of money every year.. Many clubs and venues that hired my band sent me a 1099 stating the income. It is also sent a copy to the IRS so that they know that you earned this money. I was obliged to send 1099's to the band and roadies. Since I could unburden myself from this scary looking pile of 1099's and share the load, life was good again. Before hand I had to get a W9 from everybody. That form states the name address and social security# of each individual so that I can send the 1099's with proper info on them.
The amount was certainly above $600.00 each. This is how the IRS provides for us to balanced the tax load.

The self employment tax which is filed on Schedule Se is for your profit (net income).
You'll have to pay estimated quarterly tax if your tax liability is greater than $1,000.00 (Form 1040-ES)
You also have to pay federal income tax.

AH! But there is hope! so now here the good part.

Deductions.
All deductions that you take, have to be considered “ordinary” and “necessary”
They can't be lavish or extravagant under the circumstances.
The only problem is that these guidelines are not perfectly clear.
The point is that in an audit you have to justify the expense.
If you have high expenses they have to be reasonable for the circumstances and not lavish expenses.
If I take a vacation trip around the world and claim that it is an expense just to promote my CD's in a single corner kiosk in Hong Kong it is definitely questionable.

Equipment

Form 4562.
Equipment that you bought usually gets depreciated till it is written off over a period of five or seven years.
This is how we "expense" gear that will be useable for more than a year. The term "depreciable lives" is defined by the IRS.

There is a way to expense the more expensive and longer lasting gear. It is covered by the section 179 election. In 2008 the IRS allowed you to expense up to $128K for gear all at once rather that depreciate it over 5 - 7 years. With that choice you can deduct that brand new Strat and Fender amp in one shot.

Things that normally can be expensed in total in one year include stuff like guitar strings, drum sticks, etc. You get the idea.

MORE DEDUCTIONS ON PAGE 2   PAGE 3

 

NOTE:
This is only a guide and before you file you should get it all reviewed with a tax professional. There are a lot of details and we haven't discusses long term investment, health Insurance and other deductions that are used by all of us. This is designed to be a helpful guide for entertainers, performers and musicians.
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