Tax Information for Musicians
Tax time can be a serious burden for many Americans, especially those who do not have the necessary information to handle filing. Most musicians are self-employed and must start from scratch, as they have not yet paid any taxes or reported income. Having accurate knowledge of tax law, forms and deductions that apply to your situation as a musician is crucial in avoiding overpaying your taxes or being audited.
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How to File
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A musician may be able to save money by filing taxes on his own. However, the IRS is very strict about tax law and clear evidence of your income, deductions and business expenses are necessary. The slightest miscalculation on a tax form may result in a request to refile or even an audit. Conversely, musicians may hire a tax professional to handle filing for them. This definitely costs more up front, but a professional can find more ways to lower your tax obligation and is someone to refer to should you run into complications after filing.
Income
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As a musician, and most likely a self-employed one, you are obligated by law to report every penny received as part of your job. This not only includes paid performances, but also income from lessons, arranging and transcribing jobs and any other money given to you not as a gift. This income must be reported even if you never received a W-2, I-9 or 1099 form and were paid in cash. If you are an employee of a music performance entity with a fixed income, such as a symphony, jingle company or Broadway theater, you most likely have taxes deducted on each paycheck -- you are eligible for less deductions, but tax season is much simpler.
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Standard Deductions
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Artists still fall into the standard tax brackets as everyone else and qualify for the normal deductions, $5,450 for singles, $8,000 for head of household, and $10,900 if married and filing jointly. Business mileage rates in 2010 for your car are 50.5 cents per mile for the first half of the year, and 58.5 cents for the second half. You may also deduct IRA contributions up to $5,000 if you are under the age of 50, as well as long distance business travel costs, including flights, baggage fees, hotel fees and even 50 percent of meals and entertainment for overnight trips.
Music Related Deductions
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Everything you use to perform your services that contribute to your income may be deducted in some way. The purchase of new equipment used exclusively for you job as a musician, as well as the maintenance cost of this equipment is deductible. Dues and fees associated with the musician's union, music education costs, recordings and uniforms used in performance may also be written off. However, all of these expenses must be well documented, and you have to be able to prove their use for business purposes.
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References
- Photo Credit tax forms image by Chad McDermott from Fotolia.com
