Tax deduction on your gear?

NickInMesa · #1 01-31-2010, 09:34 AM

I am sure that the professional musicians here get a tax deduction on their gear, strings and all, but what about those who do it semi-pro?

Even if I get a weekly or bi-weekly gig and just bring in, say, $200 a month (don't laugh, please)?

I am sure that a creative accountant can do a little something, am I right?

I love paying my taxes like everyone else, otherwise

onlyclave · #2 01-31-2010, 09:41 AM

Just like you're claiming that $200/month as income right?

Jefenator · #3 01-31-2010, 09:56 AM

AFAIK if it's over $600/yr you're supposed to be claiming the income. And if you're claiming the income, it seems only fair that you should be able to deduct the expenses.

I've been deducting everything I spend on music. 9V batteries, pencils, CDs, extension cords, basses, whatever... if it's in any way related to my self-employed music business, I'm deducting it from my revenue. Make sure to keep the receipts.

I'm definitely not a tax expert so I won't even try to misguide you on the specifics. I'll be curious to read how the tax preparer / musicians do.

Steve · #4 01-31-2010, 09:58 AM

If I'm turning in a 1099...I'm turning in all the deductions I am entitled to by law relating to the generation of that income. Why on earth would you not?

Truktek2 · #5 01-31-2010, 10:02 AM

If you're getting paid in cash you didn't make ANY money

Therefore, there is nothing to write off.

NickInMesa · #6 01-31-2010, 10:09 AM

Quote:

Originally Posted by onlyclave

Just like you're claiming that $200/month as income right?

Actually I do claim even little contracts, even now as I am a pull time employee, I still do little things on the side and claim it all.

The thing is, when you play in a band, you don't know what your mates will do. Likely, they won't claim it. If I do and I get audited, the auditor may probably want to look into the other guys' earnings.

We're supposed to also pay their dues to the original musicians we cover. Who does?

I like to be honest (yes, I am on those religious people who don't steal, swear, etc...), pay for all my software and music, but sometimes it's not practical.

BluesWalker · #7 01-31-2010, 10:09 AM

If you are reporting the income and your are a semi-pro, I have been told it is safe to write off up to your income. It gets dicey if you try to write off more that you report.

But don't rely on me or anyone else on here, talk to a qualified tax person if you are going to take that route (that will cost you as well, but you can write it off).

BluesWalker · #8 01-31-2010, 10:12 AM

Quote:

Originally Posted by NickInMesa

We're supposed to also pay their dues to the original musicians we cover. Who does?
.

The bars, etc you play at should be covering this cost if they want to present cover bands and if they play pre-recorded music. There have been a couple of recent threads on this topic.

lowfreq33 · #9 01-31-2010, 10:14 AM

You can certainly deduct it if you're filing a 1099. On top of that, you can deduct some of the depreciation on your vehicle (keep track of the mileage to and from gigs, rehearsals, etc.). If you have a room that's exclusively for music stuff it counts as a home office, any meals you buy while at gigs or rehearsals, that cool new shirt you bought to wear onstage, there's a lot you can deduct.

Jerry Ziarko · #10 01-31-2010, 10:22 AM

It depends how you set up your deductions. Strings, repairs, mileage allowance, insurance, etc, are deducted at full value. Equipment such as basses, amps, etc I have set up for a depreciation. Of course once I sell a piece of gear, a gain is recorded. I know music income has always been one of those "gray" areas that most people talk about.

I claim it all, and deduct the legal expenses. Good accurate record keeping is a must IMO.

Steve · #11 01-31-2010, 10:32 AM

Easy on the stagewear deduction. That is an enormous red flag and just about an impossible deduction to get away with.

If you're in GWAR you can deduct the cost of your stagewear. Deduct that "cool new shirt" you just bought and you'll meet the IRS proctologist.

But yeah, there is a TON of stuff you wouldn't normally think about that are perfectly legal deductions that you are fully entitled to.

tycobb73 · #12 01-31-2010, 12:04 PM

It depends on what your goals are. If your goals are to make money with the band and treat it as a business, you can deduct everything. You cannot deduct mileage unless you are going from one job to another. If you are leaving your home the mileage is not deductable.

If you claim it as hobby income you can deduct expenses up to the amount of the income.

If you haven't set up an LLC taxed as a corp or set up an actual corp this is handled on a schedule C form.

If you claim it as a business you'd better be willing to show that you intend to make it a business. Things like a separate checking account, business cards, etc help. If after 5 years you haven't made a profit the IRS may come in and reclassify it as a hobby. You can deduct all your gear in the year purchased but you do this in 2 steps. You first deduct it under a normal depreciation method then deduct the difference under section 179.

All this can be done in turbotax.

Whatever clothing you wear only perfomring job duties can be deducted.

Steve · #13 01-31-2010, 12:55 PM

Quote:

Originally Posted by tycobb73

Whatever clothing you wear only perfomring job duties can be deducted.

If that clothing can serve as dual purpose and be worn on the street by a "reasonable man", good luck with that. It will be disallowed. Costumes...yes. Uniforms...yes. Promotional clothing items logo'd to promote your efforts(band T-shirts)...yes.

That $500 pair of ostrich hide cowboy boots that you only wear onstage...nope. If you can walk down the street wearing it without a reasonable man thinking you have a screw loose...nope. You will loose that fight with the auditor.

Trust me. Voice of experience.

About the only dual use clothing item you're going to get over on is a tuxedo and you better have multiple pic's of you wearing it in a group setting with others to prove it a "uniform" to get over on it.

**Pacman** · #14 01-31-2010, 03:03 PM

Quote:

Originally Posted by NickInMesa

We're supposed to also pay their dues to the original musicians we cover. Who does?

No, the clubs you play in should be paying ASCAP and BMI, not you.

You should find an entertainment tax professional, or at the very least find a book on it.

Jerry Ziarko · #15 01-31-2010, 03:12 PM

Quote:

Originally Posted by Steve

If that clothing can serve as dual purpose and be worn on the street by a "reasonable man", good luck with that. It will be disallowed. Costumes...yes. Uniforms...yes. Promotional clothing items logo'd to promote your efforts(band T-shirts)...yes.

That $500 pair of ostrich hide cowboy boots that you only wear onstage...nope. If you can walk down the street wearing it without a reasonable man thinking you have a screw loose...nope. You will loose that fight with the auditor.

Trust me. Voice of experience.

About the only dual use clothing item you're going to get over on is a tuxedo and you better have multiple pic's of you wearing it in a group setting with others to prove it a "uniform" to get over on it.

You sound like you either use the same tax person as me, or you've been there done that.

Steve · #16 01-31-2010, 03:26 PM

I've been there and had it done to me.

TurboTax and the like are great but, a pro that knows what he's doing and how far you can push it is better.

IMHO

PolkaHero · #17 02-01-2010, 10:48 AM

Can anyone tell me what the depreciation recovery period is for musical equipment, is it 5 years like auto and computer equipment? Also, does it have to be brand new in order to depreciate? Of course, this is considering I'm using my equipment for more than 50% business purposes!

MNAirHead · #18 02-01-2010, 10:58 AM

Quote:

Originally Posted by BluesWalker

If you are reporting the income and your are a semi-pro, I have been told it is safe to write off up to your income. It gets dicey if you try to write off more that you report.

But don't rely on me or anyone else on here, talk to a qualified tax person if you are going to take that route (that will cost you as well, but you can write it off).

You need to file as Misc income.. research all the business deductables.

Once you claim a loss.. this is where it gets a flag

MNAirHead · #19 02-01-2010, 10:59 AM

Quote:

Originally Posted by lowfreq33

You can certainly deduct it if you're filing a 1099. On top of that, you can deduct some of the depreciation on your vehicle (keep track of the mileage to and from gigs, rehearsals, etc.). If you have a room that's exclusively for music stuff it counts as a home office, any meals you buy while at gigs or rehearsals, that cool new shirt you bought to wear onstage, there's a lot you can deduct.

There are some flags in this and non-allowables.

Unfortunately I'm qualified to say this.

My tax pack weighs about 6# and must be boxed when submitting... I then wait for my clarification letters

MNAirHead · #20 02-01-2010, 11:00 AM

Quote:

Originally Posted by Steve

If that clothing can serve as dual purpose and be worn on the street by a "reasonable man", good luck with that. It will be disallowed. Costumes...yes. Uniforms...yes. Promotional clothing items logo'd to promote your efforts(band T-shirts)...yes.

That $500 pair of ostrich hide cowboy boots that you only wear onstage...nope. If you can walk down the street wearing it without a reasonable man thinking you have a screw loose...nope. You will loose that fight with the auditor.

Trust me. Voice of experience.

About the only dual use clothing item you're going to get over on is a tuxedo and you better have multiple pic's of you wearing it in a group setting with others to prove it a "uniform" to get over on it.

Easiest way around this is to have an employee manual --- then own two of the shirt proving you wear one for personal and one for the band... the outfit should be kept with band gear..

Separation and allocation are the keys