If you are a musician, you spend a lot of time and money working to perfect your talents. Wouldn’t it be nice if you could get some of that money back on your income tax return? Well, you probably can, even if your playing is just a hobby.
First, you have to determine if your playing qualifies as a hobby or a business. The majority of tax deductions are going to come to those musicians who are earning a living through their talents. If you determine that your playing is a hobby, you can only deduct what you earned from the hobby. Intuit offers good advice about determining the difference between hobbies and businesses on their website. You might want to check it out and see how the information applies to your circumstance.
If you decide that your involvement in music constitutes a business, you need to be very precise about documenting all the expenses that you will claim. The Internal Revenue Service has a penchant for people in the music business. They have made the public statement that the music business presents unique problems in an Internal Revenue Service audit.
It is important that from the moment you decide that your involvement in music is a business; you treat it as such by keeping good records of incoming earnings and outgoing expenses. Incorporate yourself or your band. Get business cards, posters, promotional flyers, etc. Join musicians unions or organizations. Copyright your original music with BMI or ASCAP.
If you run everything as a business, you should be able to deduct all ordinary and necessary expenses related to that business from your income. Some ordinary and necessary expenses for a musician might be things like, instruments, equipment and gear, consumable supplies like drum sticks, guitar strings, picks, sheet music, CD duplication, recording expenses, rehearsal hall rentals, website and email expenses, travel expenses, storage fees, instrument repair fees, cost of clothes you perform in, attorney fees, manager fees, agent fees, membership in professional organizations, unions, and associations, copyright and registration fees, subscriptions to trade publications and magazines, any and all promotional expenses, and video and audio production expenses.
This on top of all ordinary business expenses like a computer, Internet services, office equipment, printer, copier, fax machine, paper, pencils, pens, staplers, etc.
If your business is strictly to perform, you might not be able to deduct home office expenses. If, however, part of the principle operation of your business is to record and sell music, home office expenses should be deductible. In order to be precisely certain about which deductions may or may not be legitimate for your circumstance, it is recommended that you contact a tax professional. Ask around, and find a tax professional who specializes in preparing tax returns for musicians.
Source by Chintamani Abhyankar