Rehearsal Hosts?

[mrcbass]

I track and write off mileage when I go elsewhere for rehearsals. I'm currently hosting our rehearsals (so we have AC!) and am wondering if/how others find a way to establish an appropriate value of doing this. I'm not going to go down the path of pro-rating my mortgage or anything like that (even though my living room is more studio than living room these days), but I do use considerably more electricity when hosting rehearsals (mostly because the AC is running much harder than if I'm home alone), but also in lighting and other little stuff. It's not a huge amount, but since this is treated like a small business for tax purposes, it seems like I should be able to account for this on my tax deductions.

Appreciate any thoughts on this. Thanks

 

[FunkHead]

Did you itemize last year or just take the standard deduction?

Honestly, We don't have near enough financial information about you to give any accurate advice.

 

[Torrente Cro]

I would let them bring the beer and call it even

 

[LBS-bass]

I host several rehearsals here throughout the week. Never thought about taking a tax write-off, since these bands rarely make any money. For one thing, I'm thinking that would have the powers that be looking at why I'm housing a business in a residential zone. I don't know enough about tax laws to say for sure but there's probably a deduction you can take for using home office space for work, which might be less likely to raise any eyebrows, but you would still have to link that to reported income, which may not be very much if it's a band.

For the most part, I just consider the rehearsal studio as a hobby space. The guys bring beer and wine, we have fun, now and then we go out and impress the world for gas money. It does give me some leverage with the other musicians when they start getting testy, I can always remind them that they get to rehearse here for free.

But I've been in bands that rented rehearsal studio space, so you could do a little price comparison of those rooms and that could give you some idea of what the value is if they'd have to find another place.

 

[Bodeanly]

I would just be grateful that I didn't have to commute and call it even.

 

[Coolhandjjl]

The way the tax laws changed regarding itemized deductions makes it virtually impossible for an individual to write stuff off any more.

The way to handle that is to create your own LLC. In my state, I believe it's $130 filing fee, and $25 annually. That way, you use IRS Schedule C and can use the home office deduction, percentage of utilties, internet service, you own travel, equipment purchase deductions/depreciation, etc., etc,. It will cost you to have your CPA prepare the Schedule C each year, so consider a consultation to review possible expenses and tax advantages to see if it's worth the costs to do this.

 

[mrcbass]

Did you itemize last year or just take the standard deduction?

Yes I itemize. Last year (as will be this year) my "business" expenses far exceeded my musical income. From what I've read, you can post these kinds of losses for a couple of years and then the IRS starts getting cranky about it being a hobby. Just looking for the formula (if it exists) to account for my additional expenses, just like tracking mileage allows.

I don't know enough about tax laws to say for sure but there's probably a deduction you can take for using home office space for work

Yes, you can do this, but it gets very complicated having to pro-rate the percentage of the time you use the space and what percentage of your house is used for "business". Not looking to get that complicated - just want to account for my additional expenses - just like mileage to gigs/rehearsals (all part of the business).

I would just be grateful that I didn't have to commute and call it even.

LOL - this was part of my decision to invite them to my house (besides not wanting to swelter in a garage in triple degree temperatures!) But in all honestly, it takes me longer to spread the room with all the gear than it does for me to pack my stuff and go to our "fall/winter/spring" home. Not to mention that it sometimes takes forever to get them the hell out of my house when we're done!

 

[mrcbass]

The way the tax laws changed regarding itemized deductions makes it virtually impossible for an individual to write stuff off any more.

The way to handle that is to create your own LLC. In my state, I believe it's $130 filing fee, and $25 annually. That way, you use IRS Schedule C and can use the home office deduction, percentage of utilties, internet service, you own travel, equipment purchase deductions/depreciation, etc., etc,. It will cost you to have your CPA prepare the Schedule C each year, so consider a consultation to review possible expenses and tax advantages to see if it's worth the costs to do this.

Hmm... did it last year without being an LLC, no problems. Maybe it's different this year? I just use online tax forms which guide me through what I can and can't do.

 

[Coolhandjjl]

The standard deduction was doubled, so if you had qualified expenses over that amount, then you could itemize. For most people, that doubling of the standard deduction was so high, they never had enough qualifying expenses. Hence, the Schedule C

As far as a business and corresponding expenses go, perhaps it's possible to do a Schedule C w/o being an LLC.

Everyone's situation is unique, that's why I suggested a consultation with a CPA, not advice from a bass forum. YMMV

 

[gln1955]

If you are just going to deduct the cost of electricity, it wouldn't be worth the time to make the calculations. Plus you'd never be able to back up your claim if it came to that.

 

[4SG]

If your musical income is 'far exceeded' by your 'expenses' it sounds like you're just looking for a bogus deduction for your hobby.

 

[Bodeanly]

Are you asking for tax purposes or because you want the band to chip in?

 

[ahc]

From what I've read/heard, office use of the home has been one of the leading factors in getting audited. I'm not an accountant or tax attorney and I didn't sleep in a motel last night so take this for what it's worth... random electrons on a bass internet forum.

 

[mrcbass]

If your musical income is 'far exceeded' by your 'expenses' it sounds like you're just looking for a bogus deduction for your hobby.

If I'm reporting income, I'm entitled to expense deductions. As I've said before, there is a short window that IRS is tolerant of this.

Are you asking for tax purposes or because you want the band to chip in?

Tax purposes.

It's not be a big deal and probably not worth the effort - just wanted to see if this is being done by anyone. If I can write of mileage, why not home expenses?

 

[Coolhandjjl]

From what I've read/heard, office use of the home has been one of the leading factors in getting audited. I'm not an accountant or tax attorney and I didn't sleep in a motel last night so take this for what it's worth... random electrons on a bass internet forum.

If you're entitled to it, take it. That's where a CPA helps. You get the real story, not just the "someone heard somewhere"...

 

[Bodeanly]

It's not be a big deal and probably not worth the effort - just wanted to see if this is being done by anyone. If I can write of mileage, why not home expenses?

Half of my income comes from the graphic design that I do at home. I stopped claiming anything as an expense when I started teaching. It's too much freakin' work and never seemed to make a real difference on my return. Itemizing sucks.

 

[charlie monroe]

In a recent thread one of our members made a statement I will paraphrase here.

Tax avoidance is a natural right. Tax evasion is a crime.

 

[Kmonk]

The best thing to do is ask your accountant. Otherwise, you're probably going to get incorrect information. Tax code changes constantly. The last thing you want to do is take a deduction you're not entitled to and end up being audited. If you don't have an accountant, you should seriously considered getting one. I've had one for over 15 years. One of the best things I've ever done.

 

[40Hz]

If you aren’t using a dedicated space exclusively for a trade or business purpose (i.e. you and your family do other things in that space the rest of the time) it won’t qualify.

Also, conducting a money making activity doesn’t automatically constitute conducting a business or trade. For example: if you’re a realtor who works out of your home, and you have a spare room that is used for nothing but your office space because that’s the way the brokerage you work for operates, it’ll probably qualify for a deduction. But if you do leathercraft on your dining room table as a “for profit” hobby type business, that wouldn’t be considered conducting a trade or business, - and it wouldn’t meet the exclusive use requirement.

The rules can be tricky. Especially since the tax code often uses otherwise familiar words in very specific and unintuitive ways. So anytime you’re thinking of writing off something in your home for business use, the best thing to do is drop a hundred bucks or so getting some solid advice from a tax professional. Seriously, it’s money well spent. Especially since those sorts of deductions significantly increase your chances of an audit due to how widely they were abused before Uncle Sam cracked down hard on them back in the 90s.

tl:dr - Consult a tax professional.

 

[sqlb3rn]

I too need to write off the electricity I use to grow the weed that my bandmates smoke during rehearsals.