Tax write offs

[themichaelscott]

Anyone write off Taxi and/or equipment on taxes?

"When does a hobby become a business" pops into my mind around this time every year. The IRS has a list of qualifications that make your "hobby" a legit business. I've played and recorded music consistently over half my life. I even have an Associates Degree in Sound Technology. But only now that I've joined Taxi and started getting songs in libraries do I really think I honestly have a shot at making money at this. Making money is what the IRS seems to lean hard on. Here are a couple of links I used:

http://www.irs.gov/pub/irs-pdf/p535.pdf
http://www.nolo.com/legal-encyclopedia/ ... 30000.html

I would love to know your thoughts and who writes off what. Thanks.

Michael

[Casey H]

Anyone write off Taxi and/or equipment on taxes?

"When does a hobby become a business" pops into my mind around this time every year. The IRS has a list of qualifications that make your "hobby" a legit business. I've played and recorded music consistently over half my life. I even have an Associates Degree in Sound Technology. But only now that I've joined Taxi and started getting songs in libraries do I really think I honestly have a shot at making money at this. Making money is what the IRS seems to lean hard on. Here are a couple of links I used:

http://www.irs.gov/pub/irs-pdf/p535.pdf
http://www.nolo.com/legal-encyclopedia/ ... 30000.html

I would love to know your thoughts and who writes off what. Thanks.

Michael

I can't give you an answer as to when it is OK to deduct expenses as a business as opposed it all being a hobby to the IRS. You really need to consult a qualified accountant. However, I do know that *IF* you deduct business expenses, then your Taxi membership and submission fees would be deductible.

You gotta be careful following any advice you get on this on a forum. Talk to a qualified accountant.

Best of luck!
Casey

[kclements]

I can't give you an answer as to when it is OK to deduct expenses as a business as opposed it all being a hobby to the IRS. You really need to consult a qualified accountant. However, I do know that *IF* you deduct business expenses, then your Taxi membership and submission fees would be deductible.

You gotta be careful following any advice you get on this on a forum. Talk to a qualified accountant.

Best of luck!
Casey

Agree with Casey here. I do write off a lot of my expenses, including my Taxi membership and Submissions - but it is different for other people depending on your situation. I am not qualified to tell you what you can and can not write off. Best to see an accountant to get started, and take it from there.

cheers -
kc

[coachdebra]

Disclaimer: NOT A QUALIFIED ACCOUNTANT (although my Mom is )

It is not unheard of for a business to lose money in a year or to have a year in which their net is a negative number. That alone is not enough to qualify you as a hobby vs. business. There are a few things that will raise a red flag however:

1) More than two years in a row with a net income of less than $0
2) Merging your personal finances with your business finances (all one checking account, credit card, etc.)
3) Not conducting yourself in a business-like manner.

So there are things that you can do to present yourself in a business like manner that will legitimize your business in the eyes of the IRS:

1) Register yourself as a business in your local community (city/county depending on where you live/work).
2) Keep your business and personal finances separate - have a separate checking and credit card for business only.
3) Keep receipts for all expenses and track your business activities - hours and milage
4) Be able to produce an assets & liabilities report that includes your business' assets (your music), and debt
5) Be very careful if you take a home office deduction that the physical space you are using as an office is not being used for anything else (laundry room, dining room, guest room, etc.).
6) Be able to show that you are marketing yourself - in other words, you are pursuing income for your business - whether that's booking performance gigs or submitting to TAXI, listing your music on Amazon, iTunes, promoting yourself with a website and social media.

If you do these things, not only will you look like a legitimate business to the IRS - you are also more likely to be bringing in more income.

Your business coach,
Debra

[themichaelscott]

Thanks for the advice. I guess I will find an accountant to look at my specific situation and go from there. I'm sure within the next couple of years I will cross the line. However, I am spending alot of money on upgrading or "start up" computers, software, etc right now so I don't want to miss out on the tax breaks. As far as I can tell, start up is a whole category in itself.

Thanks again,
Michael

[HowardBHC]

No matter what you do at this point, keep a diligent tally of all your receipts. It is quite possible tat your tax advisor can make use of them when you eventually get to a point that you separate yourself from your business and start filing accordingly.

Every penny counts when t comes to keeping track!!

Shout out to Coach Debra with the consistent good advice.

[coachdebra]

Shout out to Coach Debra with the consistent good advice.

Thanks for the S/O **blushing**