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Anyone else contemplate this?!

lbbc

lbbc

Sep 25, 2007
4,580
5,154
Seaford , DE
#1
If this has been discussed to death or old news....sorry.

This is the 2nd year we, my wife and I, have had to claim our band income on our personal taxes due to receiving 1099s. I was diligent about keeping mileage, receipts for everything bought for the band and auxiliary expenses directly used for the band. Thought we'd be fine....man, was I wrong. I got hammered on taxes.

I realize businesses have to claim expenses for tax purposes and I guess the days of getting paid cash at establishments are over for the most part. We ALWAYS pack the places we play and know the establishments make FAR more than we charge. Heck, the bartenders make more in tips than we get paid.

Contemplating just playing private or cash gigs only. I know this sounds like a "knee-jerk" reaction but right now I'm not making any money for a year's worth of playing. Anyone else ever think this way?
 
#3
RustyAxe said:
I think you’re also getting hit by the adjustment to the fed withholding tax tables that wete adjsted for the new tax rates. Many people are.
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Yeah...it really does hurt, especially since I retired in October. I had to increase my federal withholding on my pension due to the change. But this also makes me rethink my gigging schedule.
 
#4
Not to be a spokesperson for PNC, but their virtual wallet app has saved my butt when it comes to this (all of my bands use Zelle). I have an account just for band income and automatically have 25% placed into another account for taxes. I still do all I can to keep the taxes down. I claim it as a hobby, so I can't write off "business expenses," but the way I see it: it's money that I wouldn't have otherwise and it sure was fun to make.

Death and taxes and rock and roll. Good luck.
 
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#5
Hmm... I actually came out good with my first tax season as a "professional musician".:laugh:

Of course my expenses for the year far outweighed my earnings. I know I can't do that forever and actually don't expect to. As of right now, I have all the big stuff I need for the foreseeable future, so my expenses will moslty amount to strings and mileage for next year.

At least I hope I'm done buying the big stuff...
 
#6
Note that I'm not an accountant or lawyer.

Your band income is the same whether you get 1099'd or not, so it shouldn't affect your tax situation. There is one exception that I'm aware of, which is if you're the bandleader and get paid for the entire band and then pay out each band member's share yourself. In that case, you could be on the hook for more money than you actually earned yourself, and you have to claim the amount you paid the other members, as an expense.

Again, I'm not an expert on this, but I found it workable to treat music as a business, and file a Schedule C (profit or loss from business). This gives you a place to properly list your income and expenses, and the bottom line is transferred to your main tax form.

The bands that I play with all handle it in this way: If the band is paid by check, the bandleader pays the band members by check. This creates a paper trail for the bandleader when he reports his expenses. If you pay any band member more than a certain amount, then you have to 1099 them. For this, you need their social security number. You can either try and track them down for their SSN at tax time, or save yourself the hassle by having them fill out a W-9 for you the first time they play a gig with you.

If you think you're running a net loss because of paying taxes on your gig income, you're probably doing something wrong with either your record keeping, your tax preparation, or both. This is worth trying to get right, rather than getting out of the business.
 
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#8
fdeck said:
Note that I'm not an accountant or lawyer.

Your band income is the same whether you get 1099'd or not, so it shouldn't affect your tax situation. There is one exception that I'm aware of, which is if you're the bandleader and get paid for the entire band and then pay out each band member's share yourself. In that case, you could be on the hook for more money than you actually earned yourself, and you have to claim the amount you paid the other members, as an expense.

Again, I'm not an expert on this, but I found it workable to treat music as a business, and file a Schedule C (profit or loss from business). This gives you a place to properly list your income and expenses, and the bottom line is transferred to your main tax form.

The bands that I play with all handle it in this way: If the band is paid by check, the bandleader pays the band members by check. This creates a paper trail for the bandleader when he reports his expenses. If you pay any band member more than a certain amount, then you have to 1099 them. For this, you need their social security number. You can either try and track them down for their SSN at tax time, or save yourself the hassle by having them fill out a W-9 for you the first time they play a gig with you.

If you think you're running a net loss because of paying taxes on your gig income, you're probably doing something wrong with either your record keeping, your tax preparation, or both. This is worth trying to get right, rather than getting out of the business.
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I'm doing everything as suggested by my tax consultant. I am the BL and even though I pay everyone and provide 1099s, I'm still coming out "upside down" on my taxes.
 
#9
I do so little paid gigging my accountant told me it's a hobby and IRD aren't interested in me claiming expenses adding up to more than income so just pocket it. What I didn't tell him was I use my company vehicle for rehearsal transport enough that I chuck in the gig proceeds as cash sales to be clear of conscience. I think I might have replaced some strings 3 times in the last ten years.
 
#13
lbbc said:
Maybe that's the wrong terminology. My wife and I are making less than 1/3 of the money we charge after taxes...that doesn't seem right.
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It might depend on what we call your marginal tax rate. That's the rate you pay on the last dollar earned. If your accounting for music shows the music earnings in the last dollars earned it appears highly taxed. Maybe you could look at the overtime you did at your day job as less lucrative than you thought, while the music is taxed at base rate.
 
#19
lbbc said:
Yeah...it really does hurt, especially since I retired in October. I had to increase my federal withholding on my pension due to the change. But this also makes me rethink my gigging schedule.
Click to expand...
Your issues may stem more from your retirement then your gigging. I'm not there yet, but geting close and have learned from my mother that doing tax returns is different than when you're working. Don't know why, just is. I've heard from more than one preson that their first few years of doing tax returns after retirement are a nightmare.

I don't use a tax accountant, but I filled out a schedule C for my tiny music income and substantial expenses for 2018. I used Efile software and followed the directions and got a bigger return than I expected. I figured my expenses would compared against my overall income and would barely clear the 2% "deductible" and basically wash the additional income, maybe get a little more refund. But using the schedule C, it ended up being a considerable loss for that "business" which was benficial.

I'm sure the fact that you are BL, it's more complicated, but I wouldn't think you'd be responsible for taxes outside of what you earned as a musician. If your band earned $10K last year and your share of that is $2K, that's shoul be all you're responsible for paying taxes on. The fact that you disbursed most of the payments from the venues, shold have left you with earnings as if you were a member. No expert, but I think your tax guy did something wrong.
 

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