| For many musicians, the idea of making a decent | | | | home, if you have a separate room at home that |
| living doing what they love is practically a dream | | | | is used to run this business then that room may |
| come true. However, making a profit in the music | | | | qualify for a home office deduction. If you have |
| industry can be difficult enough without having to | | | | not already, you may need to get a small |
| worry about the tax laws and restrictions that | | | | business license from your city or country, and if |
| can make life even more complicated. Luckily, | | | | the business expands you may even need to get |
| there are plenty of steps a musician can take to | | | | a federal ID. |
| make sure they are fully compliant with the IRS | | | | Quarterly Payments |
| and their state taxing agency. | | | | If you are earning income from your music, either |
| Classify Yourself | | | | teaching or performing then you might want to |
| You need to decide exactly what type of | | | | consider making estimated quarterly payments. If |
| musician you are before you can even begin | | | | you wait until the end of the year, then you |
| thinking about taxes. What course is your career | | | | might end up with a massive tax bill, and possibly |
| taking? Are you in a band? Are you interested in | | | | even penalties and fees. To learn more about |
| being a music teacher? Or, do you offer lessons | | | | making estimated payments check out this post |
| from your home or at a nearby music shop. Once | | | | from earlier in the year. |
| you have classified yourself, if will be easier to | | | | Deserved Deductions |
| keep track of your finances and tax liability. | | | | If your music career turns into a legitimate |
| $600 Rules | | | | business, not just a hobby, then you can take |
| No matter what type of musician you are, if you | | | | advantage of all the business friendly tax |
| make more than $600 in a year doing something | | | | incentives. First and foremost you can deduct all |
| then you will need to report your income to the | | | | expenses related to the business from your |
| IRS. Whether you make that much in tips from | | | | taxable income. Just remember to keep all of |
| performing at clubs, or from teaching the piano to | | | | your receipts and records of purchases. Some |
| a family friend, it will need to be reported to the | | | | common music business deductions include |
| IRS. | | | | instruments, sheet music, trade magazines, |
| Teaching Advantages | | | | lessons and training costs, travel expenses, etc. |
| If you are a music teacher at a school, you may | | | | At Home, and On the Road |
| be able to take advantage of several tax | | | | If you are a solo artist or part of a band, that |
| deductions available to teachers. One of the most | | | | performs at several venues across the country, |
| useful tax advantages for teachers is the | | | | then your taxes are going to get a little more |
| educator expense deduction that allows qualifying | | | | complicated. Unfortunately, income taxes are due |
| teachers to deduct $250 worth of out of pocket | | | | in the state that you earned the money in. |
| expenses for classroom supplies. For more | | | | Therefore, if you live in California but get paid |
| information on tax tips for teachers, including the | | | | $1,000 to perform a show in New York, then you |
| educator expense deduction check out this article | | | | are going to need to file state tax returns in both |
| on CEO Roni Deutch’s personal blog. | | | | California and New York. Filing returns in multiple |
| The Business of Music | | | | states can become very complicated, and you will |
| If you teach music classes from home or a | | | | need to keep a detailed record of all venues you |
| business, you may be able to classify yourself as | | | | are paid to perform at. |
| a small business owner. Speaking of teaching from | | | | |