Big questions on tax info/checks that people pay us for shows.

If the checks are made out to one person, 1099s will be issued to that person for the tax year - which means ALL the band's income paid by check will result in tax liability for that person. So whoever the lucky recipient is, they in turn will need to issue checks to each band member along with separate 1099s at the end of the year in order to divest tax responsibility on a pro rata basis.

Most businesses will want to issue ONE check to a band, not multiple checks to each band member. Sorry, but that's the way it is. You're in the music business now and have to operate like a business.

 

You are discovering why "cash is king" among gigging musicians but unfortunately, in many areas cash gigs are becoming the exception and not the rule.

The best advice I can give you -- from experience -- is to get yourself a reputable PERSONAL (not band) accountant who specializes in tax preparations to help you navigate through all this.

Your income as a self employed contractor (which is what is reported on 1099s) is subject to an uncomfortably high rate of Federal taxation (25% I think but don't quote me on that). The good news is that you can offset that income through a relatively large set of deductible expenses (gear, strings, batteries, mileage, even a per diem for overnight gigs) which can bring your liability down to a more manageable level... BUT you have to know exactly what qualifies, what doesn't and if/how each expense needs to be documented. On top of which, the "do's and don'ts" of our wonderful U.S. tax code change every year and if you're not up to speed you can get jacked good on penalties.

So like I said... find someone who's an expert in this field, that you trust, and that is looking out for your interests independent of the band. It is money well spent, trust me.

 

+1

You definitely want to get an accountant. You can go either route. You could have every venue make out separate checks to the band members (which is a pain on the venue) or you could have them make the checks out to the band.

Our band has found that it is easier to have the check made out to the band. That way we can cut expenses off the top and pay each member from there. We have two attorneys in our band and both of them will tell you there is nothing better than having a good accountant to help you along the way. Neither one of them want to even deal with it either. We have a band accountant that we pay to do all of the work for us and honestly its not too costly.

 

Just to qualify my earlier post...

Not saying you shouldn't have a band accountant. Maybe you should, or maybe it's not necessary. If you're only in one band that's generating any income and you don't expect that to change, then a band accountant who is well versed in tax matters may be the only professional resource you need. But at the point you're jobbing around in multiple bands and being paid by all of them (which has been my situation the past few years), then you want someone who's taking care of your personal interests exclusively.

 

You are not required to issue 1099s unless they have received $600 or more in payments.

 

That is true. But I have issued them anyway because it prevents confusion down the road in the event of an audit. I don't trust the bookkeeping ability of musicians in general. Better to protect yourself with definitive proof of the disbursement.

 

Lol I just get my money, that's all I know...

 

True statement.

Audits happen.
Trust Me.
If Not one of you then perhaps one of the venues that paid you with a check.
The reason they pay with a check, is so that they can write paying your band off as an expense, and have the check as proof.In the event of an audit.

C.Y.O.A.
Nobody else is gonna do it for you.

 

In addition to the 1099 form, there is the W-9 form. This is the form where you get somebody's address and social security number. It can be a hassle to chase somebody down at tax time to find out their SSN, especially if they don't want their income to be reported.

 

+1

Blue

 

There are tons of posts on here about accounting. You have to run your band like a business from the get go. I was in bands where we would try and get each guy to get a different club to pay him on the 1099...it became a big PITA. I took all the checks and 1099 the band last year and found it was easiest this way. You need to keep track of all your expenses and if you are a hobbyist ( even a semi pro) you will find your deductions will probably negate your 1099 gigs...there are some places that pay by check that still don't 1099. Just have every member in the band be aware they will have to do some tax work at the end of the year.

 

For years my band played at a club that 1099'ed us and they put the check in my name because I was the one in the band they knew best. At first I resented it but when I did my tax returns with TurboTax I realized that I could write off all kinds of stuff as a side business that I never could do before. Nice when you can write off a Rickenbacker or a Fender Custom Shop bass as a tax deduction!

All that ended when the club dropped bands a few years ago, but it was a nice run while it lasted. We have since decided to "incorporate" and when we get paid by check it's now made out to the entire band. What amazes me is how many places still pay out cash at the end of the night.

 

Many small places still do this .. what are the odds that the proprietor isn't claiming ALL of his cash income?

 

Even if you get paid under the table in cash, IMO it’s a good idea to claim the income, because it’s better to be safe than sorry, and come retirement time you may be glad you did.

 

Slightly off topic, but what I have been doing the last few years is documenting all of my gigs (paying and volunteer) on a spreadsheet with columns for the following information:

- Date of Gig
- Band (I work with several)
- Venue / Event (street dance, Bubba's Bar, church, etc.)
- City/State
- Gross Pay (my share) - for the gig as well as a running year to date total
- Taxable Amount (25% of my gross pay) - so I know what to set aside for taxes
- Mileage (roundtrip)
- Per Diem (if you stay overnight for a gig or are on tour you are entitled to claim a certain amount for food/lodging every night you are away from home)
- Equipment and Supplies (gear, strings, batteries, etc.)

So at the end of the year I have a bottom line total of how much I grossed that year, what my approximate tax liability on that income will be (before deductions), and all my deductible expenses. I print that out, take that to my tax accountant along with my 1099s and away we go. I would be happy to send anyone on TB a template of what I've put together if you want to PM me with your e-mail address.

 

I would also add:
Venue Street Address
Venue Contact Name (helpful for future gigs)
Band Leader: (Whose name the check is made out to if paid by check.)
Gross Gig Pay (for the entire band). Possibly important if you don't receive a full share.
Paid in Cash: Y/N

I also would keep a copy of the venue check (possibly take a picture of it) for your records. Same as I do for all my deposits.

I would also set up another column for auto expenses overall (tire replacement, other repairs, etc). Some % will be deductible.

In regards to the 25% tax rate, to be more accurate for each individual, I suggest you calculate your overall tax rate for the previous year and apply it to your gig income. Unless there is a big change(plus or minus) in your current year's income, that usually works out just right.

See your tax accountant for Federal and State rules as they may differ.

 

Definitely would want those additional columns IF you were the bandleader. Since I'm essentially a hired gun in all of my projects, that info wouldn't apply to me, nor do I always know it or want to know it. But yeah if you're handling the business end of the band then you should definitely have that extra info on file.

With regards to the 25%... I figure that in my situation that's the highest it could possibly go, and I have a separate savings account (personal, not band) where that 25% gets banked against the upcoming year's tax liability. Between what my actual tax rate winds up being and the deductions I claim, I usually wind up with a lot more in that account at the end of the year than I actually end up owing, but at least that way I'm never caught short. The overage either gets moved forward for next year or [DEL]sometimes [/DEL]usually goes towards a piece of gear .

 

old but interesting thread. I looked for it because today we got a notification from a venue that we have been paling at for two years, wanting a SSN for the 2013 W9. They never asked about one for 2012, so this si something new

Venue always pays cash. It is rare to get a w9 from a place where you get paid in door cash?