Taxes and the Music Business


It's April and whether we like it or not time to pay the piper. Taxes dominate the April scenario and although they do not have a direct impact on your music promotion or publicity, they do affect your bottom line and should be a priority. I do not claim to be a tax expert and most of the information in this article are general guidelines. I suggest that all musicians take time to consult with an accountant or tax expert before filing their taxes. You can make the job a lot faster and easier if you know the general rules and know what to save.

If you have not filed your taxes, do it! If you have filed for an extension, make sure you meet that deadline. If you have already filed and spent hours scratching your head over what is deductible and what is not, join the club. Now may be the time for a clean sweep. You can get your expenditures and earnings lined up for the coming year so maybe next April will not be so frustrating.

Do I have to file?
This is the first question all musicians ask. The rules are simple:

  • If you made more than $600 from one source, you have to file taxes using a "Schedule C" form.
  • If you have "1099s" totaling more than $600, you have to file.
Also, don't forget royalties. If you are receiving royalties for any song that is part of your earnings.

Most musicians file must also file a Schedule SE for self-employment taxes (if your net earnings are over $400). If you are employed elsewhere and are currently paying Social Security taxes, your tax amount may not be as much for the self-employment taxes. In order for this to kick in, your income (not your income and your spouse's combined) must exceed $80,400. If your income does not pass this mark, then you will have to pay self-employment income on your income from music. (From Topic 554 - IRS)

What do I deduct?
Musicians have a number of deductions that are unique to their business. You need to become educated about what the IRS finds an acceptable as well as finding a way to save those receipts. Here are some deductions that a musician might be able to use:

  • Instruments Equipment/Gear (this category might extend to PCs if you have a home studio or are writing music using the PC)
  • Supplies (drum sticks, guitar strings, etc.)
    • The copyright of the article Taxes and the Music Business in Music Promotion is owned by Wendy Beck. Permission to republish Taxes and the Music Business in print or online must be granted by the author in writing.

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