Playing music may be your passion, but doing it professionally can also land you some valuable tax deductions. Musicians who are sole proprietors should deduct musician business expenses on Schedule C of Form 1040. If you're a musician and an employee, you can deduct unreimbursed work expenses related to your music on Form 2106.
If you are a solo artist or in a band but aren't employed by someone else to play music, you're a self-employed sole proprietor. For the most part, any ordinary and necessary expense you incur in order to play music for a profit is deductible.
The mileage expense that you incur to play a gig is deductible. As of 2015, the IRS offers a standard mileage rate of 57.5 cents per mile that's designed to cover gas, maintenance, registration, fees and depreciation on your vehicle. If you go out of town for a show or go on tour, you can write off the cost of hotels or other places that you stay at on the way. You can also write off half of the cost of meals and drinks you purchase when you're out of town to play music.
Your Musical Instrument and Supplies
Your musical instrument is also a potential tax deduction. Since a musical instrument has an expected life of more than a year, you technically have to depreciate the instrument rather than expense it. Depreciating is when you capitalize an asset and record a portion of depreciation expense over the asset's useful life. However, if you buy fewer than $500,000 worth of business assets during the year, you qualify for Section 179 and you can immediately write off the cost of the instrument.
Supplies you buy to play music and hone your craft, like sheet music, guitar picks, strings, cleaning sets, cases or bags are all deductible as business expenses.
CDs and Recording Costs
If you're selling CDs or other swag when you play a show, you need to record revenue when someone buys an item. However, you can also write off the expense of the products as cost of goods sold. The cost of goods sold includes the physical cost of making the product -- for example, the cost of the CD case, paper and printing. Recording costs are also deductible, but should be labeled as recording costs rather than cost of goods sold.
There's a slew of miscellaneous fees and expenses you incur when you're a sole proprietor. Other potential tax deductions include:
- Business licenses and local taxes
- Musical training and continuing education costs
- Accounting, legal, sales and marketing costs
- Rent, utilities, insurance and taxes on any studio that you rent
- Rent, utilities, insurance and taxes on a portion of your home if you qualify for the home office deduction.
- Professional dues or membership fees
If you play music and you have an employer such as a symphony, your music-related tax deductions are more limited. Rather than the costs of doing business, you can only write off certain unreimbursed expenses you incurred while working. You must itemize to claim these deductions, and you only receive a deduction after the expenses exceed 2 percent of your adjusted gross income. Potential unreimbursed expenses you can deduct include:
- Travel for work or to a client site.
- The cost of any training you attended that maintained or improved your job skills
- Union dues
- Depreciation of your musical instrument if your employer requires that you use it for work.
- Musical supplies or other supplies that you buy for work.
- Dues to professional societies
- A portion of rent, utilities, insurance and taxes on your home if you qualify for the home office deduction.