Now my advice for those who die, declare the pennies on your eyes.

December 28, 2007 5:24 AM

Tax Info for Musicians. Musicians and taxes don’t seem to mix very well. Taxes and administrating the business of music are often last on the list of concerns for the working musician. The above link gives some helpful tips on what to look for and some simple dos and don'ts. Also, here's some information on the often confusing Section 179 Deduction and a list of common deductible business expenses
posted by psmealey (19 comments total)

wow, great and useful post.
posted by Afreemind2007 at 5:38 AM on December 28, 2007

If there wasn't withholding, most people wouldn't pay their taxes.
posted by smackfu at 5:41 AM on December 28, 2007

I actually withhold extra in my dayjob, to offset the sting of 1099s I get as a musician.
posted by sourwookie at 6:24 AM on December 28, 2007

Most working musicians are considered "self-employed" in regard to filing their taxes. In a legal and taxpaying sense this means that your "business" as a musician and you as an individual taxpayer are one and the same.

So what's so special about musicians and taxes? Taxes are last on the list of concerns for a lot of people. Blocklayers and taxes don't mix very well either, but I don't see anyone extending sympathy to these artists.
posted by three blind mice at 7:42 AM on December 28, 2007

Kein Mitleid für den Blocklayers!
posted by psmealey at 7:48 AM on December 28, 2007

A lot of musicians consider what they do to be a hobby, rather than a profession. They play music because it's fun, and would still play even if they didn't get paid. Unless you have a label or manager doing everything for you, most musicians don't deal much with the business side of the music biz. In most cases, they are happy to play for gas money and a few beers. I doubt you will find many bricklayers who will work for tips.

Great post! I've been meaning to look into this stuff for a while...
posted by TechnoLustLuddite at 8:01 AM on December 28, 2007

I've got a virtual shopping cart full of gear for purchase in January so I can claim it as business expenses in 2008. Hopefully the IRS and I see eye-to-eye on the profit motive situation.
posted by uncleozzy at 8:01 AM on December 28, 2007

three blind mice writes "So what's so special about musicians and taxes? Taxes are last on the list of concerns for a lot of people. Blocklayers and taxes don't mix very well either, but I don't see anyone extending sympathy to these artists."

I don't think the post was about extending sympathy to musicians for their tax burdens. I see it more as advice for working musicians.
posted by krinklyfig at 8:06 AM on December 28, 2007 [1 favorite]

when i die, i want the afterlife where the musicians are, not the afterlife where the irs agents are.
posted by bruce at 8:45 AM on December 28, 2007

I worked for a band back in the '90s. Amazing bass player broke his arm at one point and needed to prove income to get a settlement from the insurance company (who tried to take him to court, and lost). Obviously, he used the two quarters where he made the most money to give to the court as proof of income to make his settlement as large as possible, which meant he had to file for those periods with the IRS (admittedly for the first time, but not the last). He got his settlement, but every year after that, the IRS would send the band a huge tax bill based on the filing the bass player did for our most successful periods. Every time, we'd have to file a return proving the amount was much less, because the band almost never made that much money again. It was funny, though, getting this bill for $20,000 for taxes on a supposed six-figure income, while we were touring around in a repurposed school bus which broke down every 1000 miles, playing for crowds of maybe 200-300 people each stop, sometimes for just enough money to pay for gas to the next town. Yeah, we're rolling in it ... Filling out the returns was greatly amusing.
posted by krinklyfig at 9:08 AM on December 28, 2007

Those common business expenses are behind the ball on mileage allowance -- this year it's up to 48.5¢/mile. Good(ish) news for us hard-driving road warriors.
posted by tspae at 9:27 AM on December 28, 2007

So, if I want to be a professional musician, but no one pays me, can I still write off instrument purchases as new business equipment?
posted by leapfrog at 9:55 AM on December 28, 2007

I suppose it's my civic duty to mention that Louisiana will give you money back merely for recording your track or album in the state. You receive a refund according to the following scale (the amounts are money spent over the entire year in Louisiana on recording expenses):

$15,000 - $150,000: 10%
$150,000 - $1 million: 15%
$1 million or more: 20%

You don't have to be a resident of Louisiana, you just need to record here. Basically, you file a Louisiana state income tax return, declare no income in Louisiana, apply for the recording tax credit, and get your refund check. The refund program is experimental and, I believe, expires at the end of 2008.

Full details are here.

There are plenty of great, cheap recording studios in Louisiana, especially if you're willing to drive outside some of the major cities. Personally, I recommend this one, located in a beautiful enclave right next to the bayou; very atmospheric if you're recording a blues album. (Full disclosure: my cousin runs the studio.)
posted by saslett at 10:07 AM on December 28, 2007 [2 favorites]

So, if I want to be a professional musician, but no one pays me, can I still write off instrument purchases as new business equipment?

IANAL nor am I an accountant, and I forget what the actual wording is, but the IRS has certain tests for the reasonableness of such deductions. You need to demonstrate that you have made reasonable and serious efforts to derive revenue from whatever activity against which you are trying to deduct expenses. Have you marketed your act? Have you printed CDs, have a web-site, booked (paying) gigs, that sort of thing. You should be aware, however, that these sorts of activities do come under some scrutiny as very few people can afford to be full-time musicians, and even if they are part-time, they tend to be sinkholes for cash.

A buddy of mine tells that story of being dragged in for his own in office audit a few years back, and in the next office over, an IRS agent was berating a musician for "not making enough money". He didn't go into too much detail about it, but beyond the tongue lashing the poor guy got, he had demonstrated he was a serious (if financially unsuccessful) musician, and let him go without further action taken.
posted by psmealey at 10:11 AM on December 28, 2007

So, if I want to be a professional musician, but no one pays me, can I still write off instrument purchases as new business equipment?

The lack of customers won't be fatal, because a failed business is still a business, but a bare desire to be a professional musician isn't a business.
posted by "Tex" Connor and the Wily Roundup Boys at 10:11 AM on December 28, 2007

Here in Ireland, artists (including musicians) are exempt from tax, thanks to the former Taoiseach named Charlie Haughey. It's about one of the only decent things he did for the country.
posted by ReiToei at 10:52 AM on December 28, 2007

Guess where I'm moving!

Any relation, mathowie?
posted by psmealey at 10:54 AM on December 28, 2007 [1 favorite]

I've got a virtual shopping cart full of gear for purchase in January so I can claim it as business expenses in 2008. Hopefully the IRS and I see eye-to-eye on the profit motive situation.

You will need revenue in the business to use any IRC 179. You can't create or increase a loss with IRC 179.
posted by Mojojojo at 4:41 PM on December 28, 2007

This is the most useful thing I've ever seen on Metafilter. Thank you!
posted by honeydew at 4:45 PM on December 28, 2007