When tax time comes, it can be confusing to know which category of tax deduction some expenses fit in. Taxes may not be due until April but it can be helpful to think before December 31 about how you will categorize expenses and income. As your work grows and evolves, you may find it useful to readjust these categories before the year ends. Music Teachers Helper can track expenses for you and help you have all your information handy when you need it.
Below are some clarifications I’ve dug up about three categories of business deductions for musicians that sometimes seem a bit confusing — deductions for “meals and entertainment”, advertising, and supplies. (Remember to keep receipts for all expenses.)
Some examples of “meals and entertainment” that can be deductible for musicians:
–meals while traveling to and from performances, workshops (but not meals on a daily commute)
–tickets for performances
–lunch with an agent, editor, manager, school director, parent or student if it’s business-related
–meals when attending a professional conference
Some examples of “Supplies” expenses:
–software for keeping track of billing and expenses, such as Music Teachers Helper
– music stands, gig bags, reeds, picks, strings
–sheet music, music paper, notebooks, books that are part of a curriculum
–mutes, mouthpieces, microphones, tuners, metronomes, speakers, amps, cords
–music filing envelopes and boxes
–bottled water for performances
–maps and GPS systems for finding gigs
–pens, pencils, paper, staples, printer supplies, whiteboard
–stamps, labels, envelopes, mailers
Some examples of “Advertising” expenses:
–promotional photos, brochures, mailers, flyers, posters
–advertising in newspapers, magazines, TV, radio, phone book
–website creation and hosting (MTH only if you primarily use it for publicity)
–stationery for business
–marketing emails and direct mails, newsletter expenses
–promotional events
–business cards
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Well, this is a tax related comment, but not sure it’s the best place to post…
Last week one of my students brought me a W-9 form with a note from his mom saying her CPA had requested it. This seems rather strange to me. She pays me from her company checks (ironically an accounting firm) each month, but I am not teaching her employees anything company related I’m teaching her child.
I have not completed the form and at this point I do not intend to. First of all I’m not comfortable handing out my SS # and second of all I do not think the money she has paid me can be legally written off as an expense on her personal or business taxes.
Anyone else experience this? Is there something I”m missing? Any advice would help before I address this with the parent.
@Maria — I completely agree with you. I think that W-9 form is totally inappropriate. The CPA could only be requesting it if the mother is treating you as a contractor for her company, and is planning to deduct lesson fees from her taxes as a professional fee of some sort. If she’s paying with company checks, I can see why the CPA would be misled into thinking that. But you don’t want to talk to her as if she’s trying to get away with something. You can just sympathize with the CPA’s error–since she’s paying with company checks, the CPA naturally assumes you are a company expense. So everybody’s a little confused, and you’re helping clear it up. I’d leave it at that, and maybe she will too, or if she really wants to get a deduction or defend using company money she might come up with some interesting explanations (which you could enjoy but don’t buy into them!). Let us know how this all ends up! I wouldn’t want to give my SS# away for something like that either. As you say, it’s really ironic that she works for an accounting firm!
IRS has been getting bad publicity from people. The Internal Revenue Service, has been performing more audits than ever before. They want you to be accurate with the amount of taxes that you claim, whether it was too much or too little. Making sure you have made all the proper tax deductions, and have receipts for them – such as for medical expenses – is one of the best tax tips to make sure you aren’t next in the queue for an audit. Proper tax filing is a good thing. It keeps you from ever having to pay penalties and keeps the audit IRS off your back.
@IRS — this is obvious advice, keeping receipts, but the comment is couched in dishonesty and intimidation. It’s dishonest because the comment writer is not the IRS, but is a writer for a money blog which appears to reiterate some of the more cynical and unsuccessful arguments of the McCain presidential campaign. It’s intimidating because it focuses on audits as the stick and offers no carrot. I don’t think you should file taxes out of fear of an audit; just do it legally and correctly, and save yourself the bitterness of the us-vs-taxes mentality.
I have a lot of last minute cancellations for lessons that I cannot fill. Are these considered business losses and can I deduct them on my taxes?