taxes??

A creative space for business discussions.

Moderators: admin, mdc, TAXIstaff

Post Reply
davidharrell
Active
Active
Posts: 26
Joined: Thu Feb 15, 2007 12:20 pm
Location: Chicago
Contact:

taxes??

Post by davidharrell » Wed Jan 21, 2009 11:49 am

Unfortunately (or fortunately, depending on how you look at it...), my music income is a small percentage of my annual income.In years past, I haven't claimed it, as my music-related expenses have generally exceeded my music-related income. But I want to claim my very modest income this year, mainly so I can write off the expenses from CD mastering, CD manufacturing, mailing costs, etc.I was curious about what other folks are doing with taxes, and if anyone had recommendations for tax books for musicians/composers.thanks!

lsp
Getting Busy
Getting Busy
Posts: 57
Joined: Sat Dec 30, 2006 2:01 am
Contact:

Re: taxes??

Post by lsp » Wed Jan 21, 2009 11:57 am

Declare your income so you can write off your expenses.Even if you don't have income you can write off expenses (within IRS guidelines of course).The tax filing software programs have good business deduction info and can help identify deductible expenses and help with depreciation, etc.Good Luck!

User avatar
ragani
Serious Musician
Serious Musician
Posts: 1246
Joined: Thu Nov 01, 2007 1:02 am
Gender: Female
Location: Milwaukee, WI
Contact:

Re: taxes??

Post by ragani » Wed Jan 21, 2009 2:56 pm

I'm not a tax expert, but I believe a business has to make money (over expenses) in something like 2 of 5 years (or something like that). Otherwise, they will try to call it a "hobby", for which you can't claim any expenses. And they may not catch it right away, but if you file, they have a time limit to audit you. And if you don't file, there is no time limit (even if you don't owe anything)-- so far as I understand. So better to file, even if you don't owe anything-- that way they can't come back to you and say you owed for something rediculous from years ago. But again, I'm not an expert here-- just my personal experience.A good attorney/accountant is helpful for these kinds of things. Good luck to you!Raags
"Whatever you can do, or dream you can do, begin it. Boldness has genius, power, and magic in it..." - Goethe
http://www.RaganiWorld.com - Turn the World to Love®
http://www.taximusic.com/hosting/home.php?artist=ragani

davidharrell
Active
Active
Posts: 26
Joined: Thu Feb 15, 2007 12:20 pm
Location: Chicago
Contact:

Re: taxes??

Post by davidharrell » Thu Jan 22, 2009 6:17 am

Thanks lsp and Raags!I was aware of the 2 of 5 rule -- figured I should go ahead and declare a loss in a year when I had a lot of expenses. (We released a CD last year...)I'll probably order this book from Amazon. Only $10.17, which I'm assuming is tax deductible!The New Tax Guide for Artists of Every Persuasion: Actors, Directors, Musicians, Singers, and Other Show Biz Folks http://www.amazon.com/dp/0879109661/

simonparker
Impressive
Impressive
Posts: 334
Joined: Wed Feb 06, 2008 9:26 am
Contact:

Re: taxes??

Post by simonparker » Thu Jan 22, 2009 6:27 am

well you almost have this right.You can treat your activity as a business if you show profit in 3 out of 5 consecutive years, unless you are racing horses, in which case it would be 2 out of 7.The more important question is, are you up for the task of producing income in excess of deductions in 3 out of the next 4 years, under the assumption that this year, you've lost money?
http://soundcloud.com/simon-parker

developing artists for record deals since 2008

davidharrell
Active
Active
Posts: 26
Joined: Thu Feb 15, 2007 12:20 pm
Location: Chicago
Contact:

Re: taxes??

Post by davidharrell » Thu Jan 22, 2009 10:17 am

I hope so -- I'm assuming it's possible to show a taxable "profit" in any year by simply not deducting all of your expenses. (Though I'm also guess that the IRS would suspicious of any business that had huge losses when it lost money, but made minimal profits in the "positive years.)A few online articles I found today:Tax Tips for Musicianshttp://emusician.com/mag/emusic_tax_tips_musiciansTax Tips for Musicianshttp://www.musicbizacademy.com/knab/articles/taxtips.htmArts Tax Infohttp://www.artstaxinfo.com/musicians.shtml

simonparker
Impressive
Impressive
Posts: 334
Joined: Wed Feb 06, 2008 9:26 am
Contact:

Re: taxes??

Post by simonparker » Thu Jan 22, 2009 11:53 am

David - um, no. You cannot pick and choose deductions to manipulate your books to create income in certain years. There are various tax code sections and regulations that prohibit such.While it might not be worthwhile for the IRS to audit a small operation and dissect your expenses versus what would be expected expenses, I'd rather just come up with some kind of idea as to whether you will be profitable or not. If you are trying to become profitable, great. If you think you can't, you might just want accept the idea that your income from music is income from a hobby.just an idea.
http://soundcloud.com/simon-parker

developing artists for record deals since 2008

User avatar
mojobone
King of the World
King of the World
Posts: 11810
Joined: Sat May 17, 2008 4:20 pm
Gender: Male
Location: Up in Indiana, where the tall corn grows
Contact:

Re: taxes??

Post by mojobone » Thu Jan 22, 2009 2:10 pm

They can regulate and prohibit what they like, are they actually going to come to my studio in hopes of spotting an extra computer I didn't expense? I mean, I'm sure they could, but will they? Come to that, I've got other stuff lying around that I didn't pay for, a band had a session and left it behind, should I not use it? The used Mac my cousin gave me when he got out of the computer biz? The instruments on loan/gear in for evaluation/consulting? Just thinking out loud, here, but even the bean counters might not want to open that can of worms.
The Straight Stuff; Roots, Rock & Soul

http://twangfu.wordpress.com
http://twitter.com/mojo_bone

simonparker
Impressive
Impressive
Posts: 334
Joined: Wed Feb 06, 2008 9:26 am
Contact:

Re: taxes??

Post by simonparker » Thu Jan 22, 2009 5:19 pm

Mojo- probably won't happen. Just don't want to show losses of $20,000 in years 1 and 2 and then show income of $5 in year 3, $8 is year 4, and $895 is year 5. Unless that actually is the case....
http://soundcloud.com/simon-parker

developing artists for record deals since 2008

Post Reply

Who is online

Users browsing this forum: No registered users and 22 guests