Tax Strategies for Musicians?

First off let me be clear that this is not about cheating taxes or grey areas. I have had to pay the IRS for legitimate mistakes and I certainly don’t want them looking at me funny for questionable filing. The other thing is that I am not a professional musician by trade. I have a day job that I will probably keep until I quit, die or they outsource me.

OK, now with that disclaimer out out of the way I’ll get down to it.

I’m writing this this because I did some freelance computer work last year and lost about 50% of that in taxes (so much for encouraging small business.) Now lets say by some good fortune I make over $1000.00 this year doing gigs and selling merchandise. If I claim it on my personal income tax as misc. income I know I will lose half (due to self employment taxes for FICA and SS).

Now as a “part time” musician and I have yet to make any income however, that may change in the future as Alex and I have been rehearsing for upcoming gigs. We are lucky that we have good relations with local promoters/booking agents and can get some “starter” gigs so that’s not a worry (That usually the biggest hurdle right?). Now most of these are of the low/non paying local music scene type deals (is there any other kind?) but that doesn’t mean that we don’t incur expenses. Gas and Tolls obviously but what about gear and software? If I decide to sell my Axiom 49 and buy an Axiom Pro or a new Subwoofer is there anyway I can deduct it as a business expense?

Its one thing to keep accounts on Quickbooks but should I incorporate? If so what kind? Now obviously there are plenty of working musicians out there for whom it obviously makes sense to incorporate (wedding/event bands and other pros), but is this the path that “itinerant” musicians should take? When should your “expensive hobby” be treated like a business? What do other “Not famous at all but occasionally make a buck musicians” do?   Obviously answers from U.S. folks are preferred but it always interesting to hear how things are handled in other countries.

Ghost of Old Bands past #dejavu

An old band mate (Static Opera) contacted me after many years and we had the longest chat on the phone. After we covered over what’s been going on in our lives for the past 18 years (Married, Kids etc), we did what we always did; talk shop and Gear.  Turns out after we parted ways he became an Audio Engineer, toured with the Genitorturers for a while, got married had family,  amassed huge collection of gear, had Ebay-A-thons and then realized how much of PITA HW can be and switched to software synths. He’s big into Reason/Record. Thats Sweet since Reason was my first love of Soft-Synths. (I had played with stuff like Cakewalk but I wan’t feeling it so I stuck w/ hardware.)   In many respects is was like hearing my story in a different voice. (Except for the Audio engineer and Touring with the”The World’s Sexiest Rock Band” part).

It was really great to talk to him and find out what he had been up to but in no time we were talking shop about gear and software, comparing notes as it were.  It was as if  we had never been apart for too long. Thats cool because I don’t have too many people I can blab on about Waveforms, samples and modulation CV routing and Thor patches without eyes glazing over. It seems lately my past has been coming back to haunt me but in a good way. Perhaps 2010 is the year of re-connecting, so far so good.

Here’s Justin’s Myspace if you want to hear what he has been up to.

Some more music.. Puff Puff Pass Mon :)

..of the Red ‘Lectroids is an Electro Dub groove that Alex and I put together a while back but the original was 11 minutes long and I had clipping issues so I tightned it up and trimmed it down to a little over 5. It’s probably going to change once Alex and I start rehearsing it for live performance but I liked the choon enough to want to share it with you all. (It wasn’t until after I named it did I realize that it should have been Black Lectroids but what the hell…. Who’s going to get it right?)