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Post by mccoyblues on Jan 15, 2007 9:41:51 GMT -5
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Post by mccoyblues on Jan 15, 2007 19:17:56 GMT -5
bumping back to page one
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Post by Tim Alexander (fmrly. Camalex) on Jan 15, 2007 20:07:33 GMT -5
This looks like an interesting site -- is this something you've used before? is it reliable?
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Post by mccoyblues on Jan 16, 2007 9:50:38 GMT -5
No, like most semi pro working musicians I just take the cash and spend it. I never considered taking the cost of my instruments, the money I spend and the miles I drive as a write off. If I were to follow this advice and document every nickel I spent and every dollar I made I'm sure I would benefit.
I was given the link from a friend who is a professional musician who spends his life on the road. For those guys, this is something they must do.
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Deleted
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Post by Deleted on Jan 16, 2007 10:00:16 GMT -5
I'm going to PIN this for a while, once everyone has had a chance to see it I will UN-Pin it and let it move off the page.
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Post by Cornflake on Jan 16, 2007 11:44:43 GMT -5
I'm somewhat chicken-hearted about this. I report all income but I only deduct recording and duplication expenses on CDs. That's because in most recent years (although not some prior ones), expenses have exceeded income. I don't want to push too much because I don't want an argument with the IRS.
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Post by knobtwister on Jan 16, 2007 12:05:53 GMT -5
Back when I was working I also reported all my income and kept track of all my expenses including mileage. I carry a daytimer calendar as my wallet so it's always handy to jot down expenses and miles driven. At the end of the year I'd just pour all that info into TurboTax along with all the 1099s and let it do it's stuff.
Don
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Post by mccoyblues on Jan 16, 2007 13:20:56 GMT -5
I know what you mean. Who doesn't want to fly under the radar of an IRS inquiry. For that matter a good majority of musicians do the same thing. I never report my performance income and will even turn down a job if I think they are going to 1099 me.
But if you look at the list of deductions (including the ability to depreciate instruments) most of us would probably come out ahead if we just came clean and declared all.
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Post by Tim Alexander (fmrly. Camalex) on Jan 16, 2007 15:44:55 GMT -5
I did some consulting work years ago (non-music-related) and went through a similar process and found it was completely justfiied. I lowered my tax basis by doing the consulting gig and experienced a loss for a couple years. The IRS certainly didn't expect that my little business (under $5K in annual revenue) would be break even or vene make a profit -- they just wanted to know I was declaring all my income -- I did and took all my legally approved expenses. All it takes is for someone who didn't like your show to report the income they paid you and for you to not declare it.. and then I think you're in "worse soup." Honestly, though my guess is except for the big boy professionals, we small potato players who sell a CD here and there and play out here and there -- we have nothing to worry about. Tthe advice in this website (upon a more complete review) seems reasonable to follow -- a Tax software like TurboTax can provide other automated information and assist in the actual forms filing I would think.
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Post by knobtwister on Jan 16, 2007 15:52:47 GMT -5
Operating under the radar is a dangerous way to go in my opinion. I'd rather mess with the Mafia than the IRS. All it takes is one 'surprise' 1099 and then the IRS asking "And how long have you been playing for money?". There's a 3 year limit on mistakes. There is no limit one how far back they can go on unreported income.
Turning down 1099 gigs can lose you a bunch of gigs including most all of the well paying ones. If you're in a band forget it. You are either getting 1099 gigs or ones that pay peanuts.
I say get legal, keep immaculate records (www.daytimer.com) and enjoy the benefits of being a professional musician.
Don
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Post by sidheguitarmichael on Jan 16, 2007 16:19:22 GMT -5
Right up front, nobody should ever take financial advice from me, based on my bank balance.
That said, I have been full time at music for 8 or 9 years and part time before that, and I have a pretty good handle on the tax stuff on that page. The advice is pretty solid. FWIW, I was able to write off my music income as a loss against my day job for "any three out of five years". Car mileage really helps do this if you drive beaters -our old toyo van was great for reducing our liability. In heavy touring years (about 200 shows) we could put on 26k legit and documented miles. The rate at that point was something like 37 cents... that's a lot of money off the top.
Instruments? Any business has start up costs. I worked my way up from gigging on a seagull grand in '99 (that was, maybe, 300 bucks) to the current Schoenberg and Rubio. Can't do that on a coffeehouse performer/teacher income without tax breaks.
We declare absolutely everything. Not just because we are all mr. and mrs. honest (though we typically are) but also because we needed to show lots of income in order to buy a home–which we did.
Declare everything; the corollary to that is deduct everything. An idea that I got while reading Julian Bream's bio years ago;
I take a big cardboard box, write the year on it and tape it shut. I then cut a slot in the top. Everything that is deductible goes in: receipts for strings, CDs, music books. AG mag subscriptions. Cashier's checks for Classical guitars. Method books.
At the end of the year, K and I cut it open and go through two evenings and two bottles of wine sorting it all out. Works like a charm.
We have all of or gigs in "gigmaster" software (by Rick Shubb, of the capo fame...what can I say? if you gig and you don't have this cheap software, you just don't get it). Mileage, airfare, CD sales, pay... all there with a keystroke.
Friends, the system is rigged in favor of folks who use legitimate (or, at least, legal) tax breaks. I am one of the least black-and-white thinkers I know, with a low discipline threshold and a profound lack of organization. And I still figured it out, and saved thousands a year. Just thousands. And, considering that there are lots of years where my income was measured in paltry rations of said thousands, that is saying a lot.
I feel strongly enough about this that I ask my music-college bound guitar students (and current majors/minors) to start with a shoebox and add their receipts up just to get an idea of what lies ahead when they actually have jobs. The ones that do are stunned to find out what they have spent on strings, music, guitars and cables... especially relative to a weekend job at papa murphy's (thanks Mom n' Dad!). I wish someone had done the same for me when I was in college... I wouldn't have had to wait so long to start reaping the benifits of "the system".
We then take everything totalled and entered on a worksheet to a real accountant-who keeps current on the law-and she rubberstamps it for us for a couple of hundred bucks (technically, she should charge us a boatload; given the plethora of 1099s and w2s and God know's what: every entity who pays us more than 600 bucks–I think that's the number–has to give us paper... but we do the sorting, and we have been using her since college, so she just charges for the entry and filing).
So far so good, knock on rosewood...
Have you all heard those stories of an elderly man or middle-aged woman, who is a black belt in judo, defending themselves against a mugger? When you are on a musician's income, you learn the power of science and leverage... or you don't stand a chance, IMHO.
Even for those with solid, full time jobs; the majority of workers in this day and age (according to the excellent book, the age of unreason) are–or will be– "portfolio people", folks with multiple income streams. God grant all who sincerely wish it the ability to make music one of those streams, if only a small one.
Buy that hand-built dream guitar of a lifetime, and write it off against your main job's tax burden. Just so long as you intend to gig for profit (and can offer up some evidence of that fact-plenty of books out there with the particulars...). It's legal. And, trust me, it feels really freakin' good. -MM
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Post by Deleted on Jan 26, 2007 7:28:50 GMT -5
Interestingly, I just got notice of a rebate coming my way from Her Majesty's Cusoms and Excise which is a novel experience for me. I was in the market for a new guitar for all of twenty minutes before the family started taking about a holiday and a new refridgerator and other such more important stuff.
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