Download our expense checklist for musicians and singers PDF Version
Download our expense checklist for musicians and singers Excel Worksheet Version

Download our income worksheet for musicians and singers PDF Version
Download our income worksheet for musicians and singers Excel Worksheet Version

Download our 12 month expense worksheet for musicians and singers Excel Worksheet Version

Click here for Musician's Sample Tax Return from THE NEW TAX GUIDE FOR WRITERS, ARTISTS, PERFORMERS & OTHER CREATIVE PEOPLE

By Peter Jason Riley, CPA

Musicians and taxes don't seem to mix very well. Taxes and administrating the business of music are often last on the list of concerns for the working musician. The artist temperament simply does not interface well with the exacting rule-filled world of federal and state taxation. Musicians avoid the whole matter and consequently leave themselves vulnerable to bad advice. The secret to overcoming this phobia is to develop an understanding of the mechanisms of the tax code and some simple, effective ways of complying with this onerous task. I often use the analogy that you may not need to know how to fix your car, but it is helpful to know how it basically works. In so doing you will pay less in taxes and you will be less likely to fall prey to erroneous tax information and disreputable advisors.

Most working musicians are considered "self-employed" regarding filing their taxes. In a legal and taxpaying sense this means that your "business" as a musician and you as an individual taxpayer are one and the same. There is no legal separation such as one would have in a corporation or other legal entity. The musician/performer usually files a "Schedule C" as part of their regular 1040 income tax form (this is where you report all those nasty 1099's you received last year!). The performer may also file form 8829 for the home office deduction and will be required to pay self-employment tax (Schedule SE) on their net income (profit) as well as federal income tax. All these forms are part of the year-end 1040 income tax filing. The self-employed musician will also usually be required to pay estimated quarterly taxes on Form 1040-ES (if the tax liability is to exceed $1,000).

The goal is first and foremost to lower your taxes! The musician/performer has a number of tax deductions that are unique. In the balance of this article we will try to break them down to their component parts to make the issues understandable. For the IRS, all deductible business expenses are those that are:

If you use a room (or rooms) in your home exclusively for your music business, you will probably qualify for the home office. The use of the room can be as a rehearsal space, storage area for equipment, teaching space, home recording studio, record keeping for the business, marketing, etc. The home office is a straightforward deduction to be calculated on form 8829. It simply utilizes a formula based on the square footage of the business portion (the home office) of your home vs. the total square footage of the house or apartment and applies that percentage to all associated costs. The costs could include rent, mortgage interest, real estate taxes, condo fees, utilities, insurance, repairs, etc. Other rules that come into play here include the "exclusive use" requirement. This rule states that the home office must be used only for the business no "mixed use" allowed. In other words, the home office cannot be part of a larger room such as the living room unless the business part is partitioned off in some way. The home office can be a powerful write-off as it allows the musician to deduct a part of what were non-deductible personal expenses. Look into the alternative "Simplified Method" it is easier but offers a much smaller tax deduction.