It’s the time of year I always dread; the income tax deadline looms ahead. If you’re facing the same deadline I am, I’ve gleaned a few choice tidbits from the web to get you in the mood (after the break). Students, I haven’t left you out; –there are tax tips ahead for you, too!
Disclaimer-
The information below is provided without warranty of any kind. All readers wishing to take advantage of the information offered here should consult a qualified income tax preparer. In no event will I or this website be liable for any damages, including lost profits, arising out of the information offered on this website.
Songwriters: you can deduct all expenses directly attributable to your writing, e.g. pens, paper, cassette & CD blanks, instruments, travel, professional membership fees, and so on. (Source - http://trowbridgeplanetearth.com/IRS/WrtrTaxTips.html)
Deductions:
Allowable Vehicle mileage allowance of $.485 (To take this deduction an accurate log of business mileage must be kept.) (I’ve seen some other figures, but I got mine from here:
http://hswcpa.com/taxrates2.html )
Parking, transportation, and food expenses for professional travel
Rehearsal space rental fees
Telephone expenses (The taxpayer must have at least two lines to qualify for this deduction. Cellular service is considered a second “line.”)
Stage clothing and dry cleaning expenses (only outfits appropriate for stage wear exclusively may be deducted)
Full or partial cost of purchasing a computer Software for contract writing, music editing, notation, and sequencing
Costs associated with conducting business via the Internet (includes ISP costs, web site development, and hosting charges)
Promotion costs: photos, mailings, cost of throwing a CD release party
Instrument and/or voice lessons (individual circumstances dictate whether this is an allowable expense)
Cost of rented or leased equipment
New musical equipment purchases
Equipment repair or maintenance costs
Cost of vaccinations for foreign touring
Cost of applicable insurance (equipment, liability, worker’s compensation, health and dental insurance)
Portion of home mortgage deduction (if office space or rehearsal space is maintained there)
Cost of tax return preparation
(source - http://www.berklee.edu/bt/113/taxtips2.html)
Additional consideration for Student Musicians:
Students are pretty busy, and income tax is probably the last thing on their minds. However, there are good reasons for filing a properly prepared tax return while in school, even if you are not required to pay tax.
Consider filing if you have any self-employment income while attending school. You can deduct expenses against that income and create a business loss (see above). You then carry the loss back and deduct it against income in the three preceding years. The amount left over can be carried forward and used in the next 15 years.
You will also be able to claim depreciation on “capital” equipment you purchase. Capital items are not used up right away, but last more than a year. For example, musicians can claim depreciation on sheet music, recordings, stereo equipment, and instruments. You probably won’t need these expenses while attending school, but you can get them on record to write off against future income. Even if you don’t file a tax return, you should store all receipts for capital property. When you do start earning money as a musician, these items will be converted to business use and written off. Believe me, some day you will be glad you saved them!
If you work and pay tax while attending school, and have equipment purchases, consider not claiming the section 179 deduction. Rather than writing off the full amount of your equipment costs in the early years when income is low, you may be better off waiting until income is higher, converting to business use, and using one of the depreciation methods to spread the expense out over several years.
Of course, you should take advantage of the new tax benefits for higher education. They include a deduction for interest paid on student loans (line 24 of Form 1040), the Hope Credit, and the Lifetime Learning Credit. Additional information and examples can be found in IRS Publication 970, Tax Benefits for Higher Education.
(source - http://www.howlandtax.com/articles/studus.htm)
Good luck!
-J
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