Ok...here's one I've never dealt with. My playing is just a hobby but I've got a 1099-MISC to report. If its just a hobby, is it self employment income?
But the good news is you can deduct expenses, such as strings and lessons. Not to mention the mileage you put into your car to go to gigs and other related stuff. 37 cents a mile, I think.
I've done that now but since ya end showing a loss for your 'self-employment', you end getting a larger refund. The IRS has got to love that.
If it is a hobby than you cannot deduct expenses. If it is a business, you can. If your business loses $ 3 out of 5 years, they will deem it a hooby and no longer allow the deductions for expenses. They will get thiers! Dimin
I've had to file self-employed for years now because of my art. There are ways to still make deductions if you report losses for 3 out of 5 years, but that may depend on the sort of business you run. You can also break even-deduct yourself down to $0 and it won't count as a loss.
This is where the IRS could easily step in and force you to prove it's a business in tax court. Just because they haven't audited you yet doesn't mean they won't. Be careful.
With my business, it's pretty easy (and extremely common) for you to prove you're a working, but not profiting artist. I also have a steady income from social security, but still make enough in self-employment where I have to file as self-employed, so I have a way to fund my business (I live cheaply) and more than enough business dealings to show it's business. I haven't had to file losses three out of five years yet (filed a profit this year that I couldn't even deduct much of), but it's not uncommon for people in my field to do so.
