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Its tax time.

Discussion in 'Band Management [BG]' started by Drgonzonm, Jan 15, 2018.

  1. Yes, all my ducks are in a row

    12 vote(s)
  2. No, I am still looking for my ducks

    11 vote(s)
  3. Carrots

    2 vote(s)
  4. Radishes

    2 vote(s)
  5. strawberries

    3 vote(s)
  6. None of your business

    1 vote(s)
  1. Drgonzonm


    Sep 4, 2017
    American SW
    Musicians and taxes, its that time again. I did a quick search on TB, and did not find much information. So, here is some information I believe you might find helpful. The information that follows might not be all that useful for 2017, some of it is old. but it might be helpful for 2018.

    The tax landscape has changed.

    I would like to introduce myself,

    . bass player

    . have an MBA

    . Do taxes part time during tax season.

    . Hobby bassist, not professional

    Its that time of the year when musicians are reminded about taxes

    I am not going to give tax advice, or legal advice, I am going to make some business suggestions that can make your life more difficult, less difficult. I will try to keep it simple, but this is a complex subject.

    1. Record Keeping Use an accordion file to save your papers. Use schedule C or Schedule E categories to sort your information, your tax person will love you for it.

    2. Have someone do your taxes, someone that provides some sort of guarantee about the results. At least one company provides up to $6000, coverage in underpaid taxes as well as covering penalties and interest. (The key here, your information has to documented and accurate, if you forgot something, then that's not covered. ) The next thing, is: who ever does your taxes will probably charge you by form, and this is where it gets expensive. So you will have to make some decisions.

    3. You might have to make a decision about filing as a business or an individual, the rules are different. You hear, you need to get a 1099 if you make over $600. If you are self employed, the threshold is lower, about $435.

    4. Ask for the proper documents, and provide the proper documents to who ever does you taxes. Generally, As a musician, you might have several income sources, and the income sources can put you into different types of business models.

    5. Identify what business models your music interest place you.
      1. Hobby

      2. partnership

      3. sole-proprietor/LLC

      4. some of the above/all of the above.
    6. Assemble a library of resources
      1. IRS documents

      2. website information (pdf info on your computer and a thumbdrive)

      3. hard copies of information.

      4. Advice from trusted and untrusted sources. (Until you completed your research, consider my suggestions, untrusted).
    7. Make sure you have the necessary tax payer numbers
      1. SSN/ITIN

      2. EIN(s)

      3. State business number(s)

      4. Local licenses?
    I am including some websource information, with highlighted topics.

    Some web sources:

    blog.sonicbids.com/taxes-101-what-self-employed-musicians-need-to-know by Jamie Davis-Ponce

    make the accounting easy

    1. set up a separate bank account

    2. use separate credit/debit card for business purposes

    3. Save your receipts

    4. Use cash accounting
    Know your forms


    • form 1040
      • schedule C or schedule C-EZ

      • schedule SE
    tax forms for bands (partnerships)

    • form 1065 (filed as a group)
      • schedule K-1 (for each partner)
    • form 1040 (filed by each partner
      • Schedule E

      • Schedule SE

    Additional forms

    • 1040 es

    • Form 1099,
      • w-9's
    Consider Professional Help

    Don't miss the Deadline

    ALL TAX TIPS FOR MUSICIANS | Associated Musicians of Greater New York – Local 802 several articles

    On the Road: Touring, Taxes, and You by Michael Chapin

    • per diem

    • deducting travel

    • How to report reimbursements

    • Meals and business entertainment
      • my note: know the federal meal allowance
    • Other travel expenses

    • Taxes in two States
    Tax Tips for Musicians by Micheal Chaplin

    • job expenses: 1040 schedule A

    • business expenses: from 1099 misc, generally Schedule C

    • A letter from an employer stating the necessary requirement of the expenses

    • List of some business and professional expenses for Musicians

    • Keep records; daily diary or ledger

    • car log with daily record (this is a tough one)
    IRS publications and forms that might be useful:

    • Pub 17 (“ your federal income tax” part 5?)

    • Pub 535 (“Business Expenses”)

    • Pub 463 (“travel Entertainment, Gift and Car Expenses”)

    • Pub 946 (“How to Depreciate Property”)

    • Form 2106 (“Employee Business Expenses”)

    • Form 4562 (“Depreciation and Amortization”)
    Buying an expensive instrument? Don't try to avoid sales tax

    New York wants its money; discussion, may be applicable to other states.

    Tax Tips for Musicians by Walter Gowns (Q&A)

    • Business or Hobby?

    • Business Expenses; whats claimable?

    • What happens if I am Audited?

    • Issues when touring

    • Tour outside of USA

    • Benefits of Filing
      • Educational credits
    • Qualified Performing Artist
      • special provisions
    Tax tips for Musicians by Gould, Kobrick and Schlapp

    • highlights for 2012 tax year, use this a basis to do your own research

    • Income & Related Expenses

    • Other Expenses

    • Home Office Expenses

    • Expenses for uniforms (why your band t-shirt is valuable)

    • Travel Expenses

    • Job Expenses and Education

    • Proceed with Caution
    If you make less than $16K as a musician, check out this tip!

    • IRS pub 463
    www.artstaxinfo.com/musicians.shtml by Jason Riley CPA

    Musicians and Singers

    • expense checklist pdf and excel

    • income worksheet for musicians and singers pdf and excel

    • sample tax return from another source

    • Introduction

    • income for the musician

    • Travel and Meals (osa.gov)

    • Automobile and Vehicle Expenses

    • Equipment

    • Home office or Studio

    • Other Unique Deductions

    • Use a tax professional.
  2. Biggbass


    Dec 14, 2011
    Planet Earth
    I haven't done my own tax return since 1983 and have relied on the same accountant ever since. Having to file both corporate and personal returns with voluminous depreciation schedules and itemized deductions there's simply zero possibility that I would consider taking on the task even if my CPA retired tomorrow. It's akin to rocket science when your tax return exceeds 25 pages.
  3. buldog5151bass

    buldog5151bass Kibble, milkbones, and P Basses. And redheads.

    Oct 22, 2003
    I use Microsoft Money to keep records, but hand it off to an accountant for tax time. Two separate businesses, plus music income - more than I can handle.
  4. 12BitSlab

    12BitSlab Gold Supporting Member

    Nov 28, 2016
    I am guessing here, but I would think that fees paid to TB to be a member would be deductible. Correct?
  5. Drgonzonm


    Sep 4, 2017
    American SW
    most likely. How ever those of us that spend a lot of time under a bridge (musically speaking), might not. I will look at the structure. Looks good
    Last edited: Jan 16, 2018
  6. Drgonzonm


    Sep 4, 2017
    American SW
    Ran into an opera singer, he did not know about the special rules for entertainers
  7. SubNoizeRat3691

    SubNoizeRat3691 Lovin' the lows

    Feb 1, 2010
    Davenport, IA
    Our BL claims everything, as if it were all their income or w/e. That way the whole bands income is accounted for as far as the IRS is concerned. We still split the pay 5 ways.

    Does this work out in our favor, or the BL’s??

    Is this a legitimate way to handle the tax side of things??
  8. fdeck

    fdeck Supporting Member Commercial User

    Mar 20, 2004
    Madison WI
    HPF Technology LLC
    I'm not an accountant, but as I understand, the BL can claim the entire band's income as income, and claim the amount paid to each band member as an expense. Every member reports their income that they receive from the BL. So they're only paying taxes on their portion of the pay. Now this doesn't mean the BL is keeping good records or handling 1099's correctly -- those are different matters.
  9. SubNoizeRat3691

    SubNoizeRat3691 Lovin' the lows

    Feb 1, 2010
    Davenport, IA
    The BL does not claim our portions as an expense, they claim it all.

    Is that different?
  10. fdeck

    fdeck Supporting Member Commercial User

    Mar 20, 2004
    Madison WI
    HPF Technology LLC
    That's probably not wise on their part. It means the BL is paying more tax than they need to, and the money is being double-taxed: Once on the BL's return, and once when you claim it on your return.
  11. Drgonzonm


    Sep 4, 2017
    American SW
    not sure. If he's getting all the social security credit? Is he providing 1099misc? And what box is the BL putting the income? Box 7 tells me you are a contractor, and you need to file 1040 sch C and possibily the SE. If box 3 then you can put it in line 21 of the 1040, other income, but you don't get social security credit. Do you have a written agreement on what is expected of you? Many band's are partnerships, and there should be k-1's and 1065s
    Without trying to open a can of worms, how open are the BL books? Does your BL use contracts for the gigs. Who owns the equipment beyond your bass and may be an a combo?
    The way I look at it, the BL is due at least a double cut, to cover the indirect costs. Do a web research for performing artist deductions, it's a nice line item reduction if you qualify.
    Last edited: Feb 12, 2018
  12. SubNoizeRat3691

    SubNoizeRat3691 Lovin' the lows

    Feb 1, 2010
    Davenport, IA
    They have been together for 15-20 years, I've been with them for 4 gigs now. To my knowledge, the BL has always claimed 100% of the bands earnings. It was briefly explained as a way for the rest of the band to not have to worry about the tax side of things. I guess that makes us an "under the table" situation??? I'd think they'd be open with the books, but it could go either way. No contracts. The BL owns everything we use, except for my Bass/Amp/Cab (even the drums kit used for gigs).
  13. fdeck

    fdeck Supporting Member Commercial User

    Mar 20, 2004
    Madison WI
    HPF Technology LLC
    Two thoughts. First, the BL is getting screwed. Imagine, for example, that the band made $50k last year, and everybody is in the 22% bracket to keep things simple. The bandleader paid each band member $10k, leaving $10k for himself. But now he pays 22% of $50k, or $11k tax. As a result, he's $1000 in the hole!

    Second, don't take tax advice from a bandleader, or from me. ;)
  14. two fingers

    two fingers Opinionated blowhard. But not mad about it. Gold Supporting Member

    Feb 7, 2005
    Eastern NC USA
    Mrs. Fingers and I have an accountant to handle our (ridiculously complicated) business taxes for both of us and personal taxes for both of us. So I'm all set.

    But is was a very kind gesture to share your knowledge and experience with all of us.... amd to take the time to post it in such a detailed way.
    fdeck likes this.
  15. SubNoizeRat3691

    SubNoizeRat3691 Lovin' the lows

    Feb 1, 2010
    Davenport, IA
    While we don't make near that sort of money, I completely understand what your saying. I don't know if its worth noting, but the BL and Guitarist are married, so I guess they are taking 2/5 while paying taxes on the whole.. Still not great for them. Also, we all have Day jobs, this is a "for fun" type of band. Maybe its worth it to them to keep it simple in this way? I can't say for sure. I thought it was a little strange when it was first brought up, but seemed to work out in my favor, so I didn't question them.

    Everything I'm paid is in cash.:thumbsup::thumbsup::thumbsup:
    fdeck likes this.
  16. Drgonzonm


    Sep 4, 2017
    American SW
    be careful of that that word income. It is different than the word receipts. From the receipts ,the BL deducts advertising, the equiv of equipment rental, transportation, office expenses, and a slew of other things. Look he may have a positive cash flow. And moderate income . I suggest the band members talk to a tax pro, one who has dealt with the entertainment business, because it sounds like some are not getting paid. I do not believe the band members are accounting for their tax liability right. The bl is probably alright, and the members are contractors. Are the payments to the members gifts?
    12BitSlab and fdeck like this.
  17. Tony In Philly

    Tony In Philly Gold Supporting Member Supporting Member

    Oct 25, 2007
    Filthydelphia, USA
    There is still one venue that has not sent me a 1099 yet. They told me they have until March do so. I though the standard rule was January 31.
  18. Drgonzonm


    Sep 4, 2017
    American SW
    believe me it is nice to get That 1099, but if you have a good estimate create a substitute 1099 the date is Feb 15, that's tomorrow, I don't recommend substitute documents, they are. Flags
    Tony B. Filthy likes this.
  19. bobsax


    Jan 16, 2011
    Southern Oregon
    Many Thanks to you all especially Drgonzom for starting the thread

    So from reading above, as BL I should deduct the income I paid my mates but do I need to make them fill out IRS forms and send them 1099's for work that amounts to less then $3K?
    I thought I heard that I don't need to collect their SS# etc but they are expected to claim the income.?
    I have a venue that sent me a 1099 as leader for $2400. I split it with the other members and their subs.

    I'm in another band as sideman (at the same venue) and that BL was saying she's going to have to pay $200 in taxes for the same $2400 in income that she made. We were thinking that $200 is easy to deduct on a schedule C.

  20. Drgonzonm


    Sep 4, 2017
    American SW
    As , I mentioned, I am not in the position to give advise, let's look at the payment of $2400, in my state, the first 7% might goes to the as gross receipts tax. The $2400 is not income but reciepts My guess, there is not a formal agreement, between you and your band mates, the fact that you distributed, money suggests a partnership relationship, at the minimum send your band mates a letter stating how you paid them. Do you compensate the band members for practice? If not, further suggestion of a partnership. The subs, suggest, independent contractor.
    From your description, you might have business type deductions, that will reduce your tax liability, your band mates could have similar deductions.
    It's a pita, to have formal agreements, but as BL, maybe it's time to declare a formal partnership, your band mates as limited partners. The partnership has indirect costs, the instruments, the amps, are all assets. If somebody, provides music, there are copying costs. You can't say these costs aren't subject to the demands of a single gig. An obvious exception, would be learning a theme song for a corporation.
    When I bid on jobs, for general contractor, not associated with music, we many times were limited by contract to a maximum % of chargeable, indirect costs.
    For the gig what costs did you have, did the venue require you dress a special way. For example its a CW gig, and the venue requires everyone to wear dienum, and pearl botton shirts, plus may be a Stetson, as an entertainer, the rental of the uniform might be deductible.
    How did the band get to the gig? Did you provide the PA? There are costs associated with the actions.,

    IMO, the formalization of the band agreement will make some members angry. "THIS IS BS," when it's not. To me, the organizer/BL needs an extra cut to pay those out of pocket expenses. and I have not been a band leader.
    To justify an extra cut, down load from the irs.gov website, the 1065 form match up your expenses and revenue for last year, figure out how much profit you made, I'll make a bet, you didn't make as much as you thought you did.
    Things have gotten complicated, And I have only covers a portion of what you need to do
    bobsax likes this.

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