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Discussion in 'Miscellaneous [BG]' started by c-ba55, Mar 4, 2003.

  1. What's the general thoughts on paying taxes on musical income?

    Just the stuff where you gave an employer your SS#?

    Just the stuff where you got paid by check?

    Just the stuff where you received more than $x from a single source?

    Just the stuff where you received more than $x from a single source at one time?
  2. I think the subject of venereal disease would elicit more interest than this subject. LOL! Funny how everone goes suddenly silent......
  3. Petebass


    Dec 22, 2002
    QLD Australia
    I'm an accountant but I'm in Australia and not up to speed on USA tax laws. I believe Rabbid Granny is also an accountant but he's Canadian. Surely there's someone on TB who knows U.S. tax??
  4. RAM


    May 10, 2000
    Chicago, IL
    Reluctantly, I'll come forward. Accounting educated and (former) practitioner, present and accounted for.

    Anyway, the US government (and most other governments, I believe) tax income. How do you define income? Income isn't limited to what an individual or business is paid by check. What about credit card payments? How about barter? Why not cash?

    The thing is, if the government only taxed income paid by check, no business in their right mind would pay their employees by check! They'd all be paid in other means. Keep in mind that the US tax code sets forth that not only do you pay income tax, but also FICA (social security), medicare, etc. The FICA you pay is essentially payment into your own social security "account" that your employer is required to match. In addition, there are other taxes your employer pays that are "on your behalf", including FUTA and SUTA (federal and state unemployment taxes).

    In regards to giving/not giving your employer your social security number, that has absolutely nothing to do with how much you pay in taxes. All the ss# is, is a way for your employer to "withhold" from your paycheck, an estimated amount of how much you will owe the gov't in taxes at the end of the year. If your boss withheld too much, you'll get a refund. If he/she withheld too little, you get a tax bill.

    In regards to musical income, why should that be different? Because it's artistic income? What are the ramifications of that? I'd think that you'd see a large number of people going out and declaring themselves musicians. Furthermore, they could build a great lifestyle for themselves based on money earned from music, and not pay taxes. If you think that's a good idea, lobby your congressperson.

    In regards to your comment re: single source, I don't understand what you're asking. But, consider contract employees or consultants, who do many jobs and get paid from a number of sources. Is that considered multiple sources that shouldn't be taxed?

    The bottom line is, if you wanted to pass tax legislation allowing for your beliefs, you'd see literally billions and billions of dollars less per year going towards whatever it all goes towards.
  5. Petebass


    Dec 22, 2002
    QLD Australia
    The Australian Tax office thinks it's different. It's actually pretty easy to run a "musician" business at a loss. They're approach is that it has to be a full blown business because declaring the income also entitles you to a world of deductions that would not have otherwise been available. If you get slapped with the tag of "Hobby", you can't claim any expenses, and that's obviously better for the Govt.

    Having said that, We're the third highest taxed nation in the world per head of capita so I should shut up now :)

    Maybe I should move to Vanuatu?
  6. The US law is clear enough, you're supposed to pay tax on everything. What I'm wondering about is common practice of the law. When I had a "real job," they reported to the IRS: "we paid this man (uniquely identified by my ss#) $x this year." Then I HAD to pay taxes based on that, or they would come after me. The money was paid over the table.

    The question is really about under the table income, not musical income. Musical income just happens to be mostly under the table. I'm trying to establish the exact level of the table. What is the IRS capable of knowing about? (regarding the various channels of income I mentioned above)
  7. thrash_jazz


    Jan 11, 2002
    Ottawa, Ontario, Canada
    Artist: JAF Basses, Circle K Strings
    My guess is that if there was no contract involved, they'd have a very difficult time finding it, especially if your band is neither signed nor registered as a business.
  8. Eric Moesle

    Eric Moesle

    Sep 21, 2001
    Columbus OH
    I know a guy (**cough, hack, yeah, a guy I know . . .) and he only claims the income that gets signed for by someone in the band (i.e. gives the bar a social security number or signs a check in return for getting the cash), and only claims the cash if it gets deposited in his checking account to pay other bills. Its fairly untraceable otherwise, though you're supposed to claim it all . . .
  9. RAM


    May 10, 2000
    Chicago, IL
    If it's deposited into an account, ANY account, it can be traced.;)
  10. RAM


    May 10, 2000
    Chicago, IL
    Contracts may make the money a little easier to trace, but only straight cash is difficult.

    Don't forget a couple of simple rules:
    1. If you buy something, you have to be able to afford it. Many people actually report less income than they could possibly earn, based on living styles. The IRS computers use sophisticated sampling techniques to look out for that kind of stuff.

    2. Don't do the crime if you can't do the time. If you're trying to save yourself $50 or so per year, is it worth getting busted? And, if you're trying to save yourself hundreds, or thousands of dollars, it'll be easier for the IRS to catch you, and the punishment is likely going to be worse than the "small-timer".
  11. RAM


    May 10, 2000
    Chicago, IL
    In the US, if you declare being a musician as a hobby, you can deduct any LEGAL expenses incurred that are directly related to that hobby, as long as your expenses do not exceed your hobby income. In that sense, the US law is more straightforward.
  12. Hategear

    Hategear Workin' hard at hardly workin'.

    Apr 6, 2001
    Appleton, Swissconsin
    "You don't pay taxes, they take taxes." -- Chris Rock

    I think paying taxes on anything sucks. When I was gigging, I always got paid in cash, so I didn't claim any of it.

    :eek: :eek:
  13. Petebass


    Dec 22, 2002
    QLD Australia
    Guys I think we should shut up now. We're dobbing ourselves in.

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