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Post by Phil N. Theblank on Mar 10, 2022 10:43:04 GMT -5
Tax question. So, the band I play in had a gig last year at a city festival.
The gig paid with a check made out to the band $770 [ each person got $70 ].
Then the band leader’s accountant told him to send each of us a K-1 statement which means we have to file in that city.
The tax rate is 2.25% which equals $1.58. Some members are upset, not about the $1.58, but the hassle of paperwork.
Any advice?
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Post by aquaduct on Mar 10, 2022 10:55:20 GMT -5
Does the K-1 statement get filed with the government in any way? I mean besides the band leaders taxes. Does the statement have your social security number on it?
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Post by John B on Mar 10, 2022 12:38:21 GMT -5
Just some quick musings, but something is getting lost in translation. K-1s are schedules in partnership or S Corp returns, and are filed with the IRS and state. That means the band is filling a partnership return, which most do not unless the band is a serious, professional activity (meeting all of the profit motive requirements under the hobby loss rules). I have seen exactly one band filing tax returns in 26 years. Most are hobbies - but then again, in my career I've never practiced in a place like Nashville or other high-activity music environment.
Filling requirements in localities carry depending on the state (and locality), so I'm not any help there. But if there's a partnership return, are you getting reimbursed for your expenses, like mileage? Or is he taking care of his expenses and sticking the rest of you with income and unreimbursed expenses?
If it's not a partnership, he might be contemplating sending 1099s to each of you. Of course, he's late on those. And they're not required if you received less than $600 in compensation for services.
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Dub
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Post by Dub on Mar 10, 2022 12:48:44 GMT -5
Tax question. So, the band I play in had a gig last year at a city festival. The gig paid with a check made out to the band $770 [ each person got $70 ]. Then the band leader’s accountant told him to send each of us a K-1 statement which means we have to file in that city. The tax rate is 2.25% which equals $1.58. Some members are upset, not about the $1.58, but the hassle of paperwork. Any advice? Form K-1 is for beneficiaries of estates and trusts. www.irs.gov/pub/irs-pdf/f1041sk1.pdfThis sounds really strange to me. If the check went to “the band,” then someone owns a bank account in the bands name, even if it’s just a DBA account. This means there is also a federal tax number for the band. The band is required to file earnings reports for any members who were paid more than $600 for the tax year involved. If no band member (I.e. employee) earned over $600 in the year then all the band’s income is reported by the band owner as receipts. The money paid to each musician is an expense for “the band.” Castle Ridge has had its own tax ID from the start and our accounting has always been professionally done. |
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Post by aquaduct on Mar 10, 2022 12:55:10 GMT -5
That's a much better answer than I was going to give but it's along the same lines. With the refiring of our duo we now have to contemplate the same thing. What I remember was the $600 rule that came into effect during our last run. The way we dealt with it is my wife and I would take turns getting paid each gig which gave us maybe 2 or 3 gigs each per year which is way more bookings then we'd ever get in one place in one year.
Solved that issue quite nicely.
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Post by John B on Mar 10, 2022 13:04:52 GMT -5
That's a much better answer than I was going to give but it's along the same lines. With the refiring of our duo we now have to contemplate the same thing. What I remember was the $600 rule that came into effect during our last run. The way we dealt with it is my wife and I would take turns getting paid each gig which gave us maybe 2 or 3 gigs each per year which is way more bookings then we'd ever get in one place in one year. Solved that issue quite nicely. The $600 threshold for reporting been around since 1954, I think... And just because income's not reported doesn't mean it's not income.  |
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Post by aquaduct on Mar 10, 2022 13:09:14 GMT -5
That's a much better answer than I was going to give but it's along the same lines. With the refiring of our duo we now have to contemplate the same thing. What I remember was the $600 rule that came into effect during our last run. The way we dealt with it is my wife and I would take turns getting paid each gig which gave us maybe 2 or 3 gigs each per year which is way more bookings then we'd ever get in one place in one year. Solved that issue quite nicely. The$600 threshold for reporting been around since 1954, I think... And just because incomes not reported doesn't mean it's not income. Yeah, but they started to enforce it more in about 2010 when venues like wineries could no longer just grab $200 out of the day's cash drawer. Then all of the sudden EVERYONE wanted a 1099 or something like that. But there's always a way around everything. |
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Post by John B on Mar 10, 2022 13:14:03 GMT -5
Tax question. So, the band I play in had a gig last year at a city festival. The gig paid with a check made out to the band $770 [ each person got $70 ]. Then the band leader’s accountant told him to send each of us a K-1 statement which means we have to file in that city. The tax rate is 2.25% which equals $1.58. Some members are upset, not about the $1.58, but the hassle of paperwork. Any advice? Form K-1 is for beneficiaries of estates and trusts. www.irs.gov/pub/irs-pdf/f1041sk1.pdfThis sounds really strange to me. If the check went to “the band,” then someone owns a bank account in the bands name, even if it’s just a DBA account. This means there is also a federal tax number for the band. The band is required to file earnings reports for any members who were paid more than $600 for the tax year involved. If no band member (I.e. employee) earned over $600 in the year then all the band’s income is reported by the band owner as receipts. The money paid to each musician is an expense for “the band.” Castle Ridge has had its own tax ID from the start and our accounting has always been professionally done. K-1s report income to beneficiaries (estates and trusts), partners/members (partnerships or LLCs) or shareholders (S corps), depending on entity type. Castle Ridge would be an example of a band I would expect to be more than a hobby. |
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Post by jdd2 on Mar 10, 2022 16:06:04 GMT -5
... K-1s are schedules in partnership ... returns, ... he's late on those. ... K-1s are always late. A few years ago one came in May. Besides the tax filing quirks. I avoid any L.P. like the plague. |
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