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.
March 14, 2010
Categories: Uncategorized . . Author: 3rev . Comments: Leave a comment