If you're a professional musician, can you write off your gear?

[SuperDuck]

I'm not a pro musician, nor do I ever plan on being on full time - this is just a question that popped into my head today.

If you're a pro musician, where all of your income is from playing gigs/sessions, can you write off your basses as an expense on your taxes? What about strings, cables, etc.?

[Beefbass]

Originally Posted by SuperDuck

I'm not a pro musician, nor do I ever plan on being on full time - this is just a question that popped into my head today.

If you're a pro musician, where all of your income is from playing gigs/sessions, can you write off your basses as an expense on your taxes? What about strings, cables, etc.?

Don't quote me on this, because I'm no tax expert. But to the best of my knowledge, as long as you have receipts for everything, you can do this.

As for us part timers-unless you play in places that send out a 1099 each year, it may not even be worth your while. The reason is, if you show up to the tax guy with receipts for gear, that must mean there is income somewhere.

So, IMHO-again, I'm no tax guy-if you do it for a living, or part time, but get 1099's, it should be no problem.

Maybe those here at TB who actually do this can provide a better insight. Maybe the guys who do it full time like JimmyM, Jazzbo, or Nonsqtr?

[willgroove2]

you can't write off bass's you already own but you can write off strings,repairs,car repairs tux or clothing cleaning ect.

[Selta]

I'm pretty sure that you can write it off if it's part of your income. I had to take an amp in to have it looked over/repaired before selling it, and the guy told me that if I use the gear to make money, I can write it off as long as I keep the reciept and can prove that gigging was in fact part of my income. I'm pretty sure this applies to new gear as well, since he said that it does. Now, if you get audited, just make sure you can prove everything neccessary. If you do cash paying gigs, without contract or recipets, this gets fishy real quick.

-Ray

[BurningSkies]

I don't do this, because I don't keep complete records or reciepts for my music/band stuff, but my guitarist does do this. He happens to have more itemizations in his life that make it worth it...he saves every tollbooth reciept, all equipment/upkeep costs and does write it off every year. Some years, when he's buying new guitars, it's worth it...most years its a modest thing.

I take a standard deduction, and don't have anything past my day job and my band stuff, so it's not worth it for me...no dependants, not a homeowner, etc.

[Chunk-O-Funk]

Don't quote me on this either but I think you can write off more than just gear.

The band I was in last got a few 1099's. Not really enough to complain about but this question came up when we started getting them.

I think you can write off gear that you got that year, plus things like strings and repairs. I think you can also write of things like gas, mileage and maintenance on your vehicle. Of course you would have to keep a log of that and might not be worth the trouble.

Bottom line, as long as you can claim more than you have gotten a 1099 for, you will show a loss and will not pay taxes on the 1099.

I think if you are a full time pro, any deduction is worth it because your income is not taxed until the end of the year. If you don't deduct your own taxes and put the money aside you could find yourself paying the man.

[syciprider]

I used to do a lot of volunteer work with the CA State Park rangers. I was part of a mtn bike patrol in the Cuyamacas. If I log enough hours I can write off every fancy accessory I bought for my bicycle that year. $800 wheels? Sure! $200 seat? No problem!

Anyway, I'm guessing you can also do charity shows and get the write offs.

[JimmyM]

I write off every single piece of gear that I own, from instruments to picks. As for the problem of writing off gear you bought in the years before you started working pro, I formed a DBA company and sold my gear to the company.

[burk48237]

I am not a Tax Lawyer, but here's my understanding. I had a side Photography business for several years.

#1 I believe the business has to be registered with the state, usually at your local county clerks office. You have to have a business name, usually band name will suffice. If your doing fill in's you can characterize your freelancing as a business.

#2 You must legally report all income, just because their not filling 1099's doesn't mean they aren't showing pay-out's to bands in their own books. If a club gets audited, and they show records of a pay-out to your band that audit trail MAY lead to you.

#3 Keep Records and receipts, usually for the semi-pro, you won't end up paying much, if anything in taxes because the expenses will eat it up. Keep records of everything, if you rent a practice space, how much do you pay? Millage, strings, cables, batteries, and if your using your house for practice you may be able to write off a portion of your utilities and house payment. This usually figured by percentage, if your practice room is 10% of your house the cost to heat it is a business expense.

#4 The big stuff (Capital expenses ) has to be depreciated, it use to be over seven years, but that may have changed with the Bush tax cut. Under the old rules, you could depreciate the cost of a large Item, Amp, Bass, PA over seven years at 15% a year.

#5 One quick note, most semi pros can do this with a Schedule C, Be real careful about declaring a business loss every year, that can be a "red flag" for auditors, because most businesses are expected to make a profit after 4 or 5 years.

Hope this helps.

[geoffkhan]

Yeah, you can write it off as a business-related expense: if your purchase is involved somehow with your income. So just remember to keep receipts from EVERYTHING. You can write off gas money, instruments, new strings, bridge tolls, etc. It'll all add up and you'll be glad you spent the extra effort to collect receipts for everything.

[Pacman]

As long as you claim income from it, you can claim expenses. You don't need to register your business, as long as you're operating under your own name. You don't HAVE to have reciepts, or 1099s, but it's safer if you do. Also note that if you show a net loss for 3 consecutive years, the IRS considers it a hobby, and you lose the deductions.

[JimmyM]

While it's true you don't need to register your business, if you want to sell equipment to your business that you bought in previous years, you do.

[Sutton]

Yes, you can, I work at an H+R Block, and all your gear bought for the year can be written off. You can also write off any gas you may have used to make to the gigs.

[Coutts_is_god]

"Its a write off for them...............They just write it off"
"You have no idea what you are talking about"

[Tash]

One trick I know a few professional musicians use is to register their band as a corporation, then charge the company a fee to lease gear owned by each individual member. That lease fee is a legitimate expense incurred by the buisness, and as long as it isn't exorbidantly alrge can be deducted from the band's corporate income tax.

This avoids one of the potential downsides of having the corporate entity own your gear: if the band were ever sued for anything and had a judgement against them that equipment is considered an asset and could be seized to pay for it. This defeats part of the purpose of having a corporation in the first place: protection of personal assets.

[brianrost]

You are REQUIRED by the IRS to report any income you make from playing music, period. You are allowed to deuct expenses. If you can't eventually show a profit, the IRS will consider it a hobby and your LOSSES will be disallowed. You can still deduct expenses up to the amount of your income (which is a wash compared to not reporting at all, though at least it's legal). You don't need to incorporate, you can file as a self-employed contractor.

Stuff that's deductable:

-- ANY equipment you buy, including supplies like strings, cables, picks, batteries. Expensive items can be depreciated over multiple years (say take 20% every year for 5 years). Your existing gear can be depreciated from the current appraised value.

-- Maintenance and repair costs

-- Travel expenses...you can itemize all your gas, auto repairs, etc. or just take a standard mileage deduction. Tools, parking, motel rooms, bus and plane tickets, SOME meals, etc. That includes travel to rehearsals, lessons and the repair shop, too.

-- Costs of maintaining a rehearsal space, lessons, instructional materials (including CDs you buy in order to learn tunes), studio time, blank tapes and CDs, postage, laundry for your gig clothing, etc.

Gotchas:

-- Any gear you SELL is considered INCOME if the sale price was higher than the current depreciated value.

-- If you make a SIGNIFICANT profit relative to your day job's income you may need to increase witholding on your paycheck or pay quarterly estimated tax payments to the IRS.

If you plan on doing this, it's best to consult with an accountant or tax preparer for at least the first year or two.

[brianrost]

Originally Posted by Chunk-O-Funk

I think you can also write of things like gas, mileage and maintenance on your vehicle. Of course you would have to keep a log of that and might not be worth the trouble.

There is a standard mileage deduction that can be used instead of logging all the gas, repairs, etc. individually. It's about 39 cents a mile right now.

All you have to do is log the mileage for each gig, rehearsal, trip to GC and add it up. Any office supply store will have log books for this purpose.

Worth the trouble? You bet!

Let's say you have a gig 50 miles away, that's 100 miles round trip so the deduction is $39. Say, how much did that gig pay anyway?

I probably log 3000+ miles a year, that adds up to over $1000 plus a few hundred dollars in tolls, all deductible.

[wyliee]

Originally Posted by brianrost

You are REQUIRED by the IRS to report any income you make from playing music, period. You are allowed to deuct expenses. If you can't eventually show a profit, the IRS will consider it a hobby and your LOSSES will be disallowed. You can still deduct expenses up to the amount of your income (which is a wash compared to not reporting at all, though at least it's legal). You don't need to incorporate, you can file as a self-employed contractor.

Stuff that's deductable:

-- ANY equipment you buy, including supplies like strings, cables, picks, batteries. Expensive items can be depreciated over multiple years (say take 20% every year for 5 years). Your existing gear can be depreciated from the current appraised value.

-- Maintenance and repair costs

-- Travel expenses...you can itemize all your gas, auto repairs, etc. or just take a standard mileage deduction. Tools, parking, motel rooms, bus and plane tickets, SOME meals, etc. That includes travel to rehearsals, lessons and the repair shop, too.

-- Costs of maintaining a rehearsal space, lessons, instructional materials (including CDs you buy in order to learn tunes), studio time, blank tapes and CDs, postage, laundry for your gig clothing, etc.

Gotchas:

-- Any gear you SELL is considered INCOME if the sale price was higher than the current depreciated value.

-- If you make a SIGNIFICANT profit relative to your day job's income you may need to increase witholding on your paycheck or pay quarterly estimated tax payments to the IRS.

If you plan on doing this, it's best to consult with an accountant or tax preparer for at least the first year or two.

+1, consult with an accountant/tax specialist.

I formed an LLC for all my music activities. My tax accountant also handles my family taxes. While it is not cheap, it has proven beneficial in catching all the little details in taxes.

I use one room in the house exclusively for music related activities. We're able to pro-rate our mortgage and monthly bills to the business as an expense. That was one thing we never would have thought to do on our own.

Bottom line, consult an expert and keep track of everything.

[Dkerwood]

Ok, so you can write all this stuff off, and for most of us, we'd be taking a loss (or a near loss) every year, since most musicians put their money right back into some aspect of the music. So how does this help exactly?

I mean, can you pay less on your "day job" taxes if you take a big enough loss on music?

I guess I'm confused about the benefits of going to all this trouble...

Oh, and somebody told me once that you could write off education costs related to your business? It sounds kinda fishy to me...

[AaronS]

Consulting a tax specialist is a good idea. However, as someone who was self employed in a real estate consulting business for 30 years, I strongly recommend against deducting for a "home office". This deduction has to be recovered (paid back) when you sell the house. Also it is also one of the items (among many) that the IRS uses to trigger an audit. An audit is a major unpleasant experience. As far as I am concerned, mixing your personal tax items with your business tax items is similar to co-mingling your personal funds with business funds: a definite road to serious problems. I used a home office as my only work space other than my car for many years and despite the fact that I could claim that deduction, I never found it to be either worthwhile or wise. I did depreciate cars for years and later switched to the standard mileage deductiona when the amount became reasonable.

Lots of naive people think that because the plethora of IRS regs can be combined to "scam" the system that they can get away with it. At some point, the IRS usually catches onto what is going on and you will suffer serious consequences.

OTOH, if you are operating a legitimate business, then it is reasonable to expect you to pay legitimate expenses to generate an income, and those expenses are deductible because you are supposed to pay taxes on your income, not your revenue.