Music Teacher's Helper: Blog: Specifics on Musicians’ Tax Deductions

Specifics on Musicians’ Tax Deductions

Fri March 6th, 2009 by Ed Pearlman

Many thanks to Michelle for her recent helpful and readable post about tax deductions. I can see by the comments that (no surprise) there’s some confusion as to how to interpret things.

I’ve personally found it a little confusing, even if I know what to deduct. Which category of deduction do I put Music Teachers Helper in, for example? See below. What I’ve done here is to reproduce some examples from IRS publications for you. The IRS even specifies some expenses that are suitable for musicians.

Consulting an accountant is usually a good idea because these are only examples and there may be specific situations that you will need clarification on. My preference, instead of paying an accountant, has been for many years to use a good accounting software because it takes you through all the steps, asks all the questions, incorporates all the latest changes, and makes sure that you have everything right, and explains things if you’re not sure. I’ve found that TurboTax has done a great job for me–here is a link to getting TurboTax if you’re interested. It includes your state forms and efile as well. (It’s deductible, too, of course!)

Business deductions are relevant to musicians who use Schedule C on their taxes, which you need to do unless all your income is from wages on W2 forms. The deductions below are broken into these categories: Mileage, Home Office, Meals and Entertainment, Advertising, Supplies, Office, Dues & Fees. Remember that you need receipts for everything, to back up your claims.
MILEAGE: musicians and teachers often drive a great deal and this year you can deduct over 50 cents a mile. You can’t deduct mileage if you’re “commuting”, in other words, if you’re an employee and drive to and from work. But if you drive to other places than your primary place of work, or if you’re not an employee but work for yourself, you can deduct mileage as you drive to various locations for any business purposes. The catch is that you have to keep a written log of your odometer readings, dates and destinations.

HOME OFFICE: you can deduct utilities and other expenses for maintaining a home office space based on what percentage of the home it is, only if it is a space you regularly and exclusively use to meet with students or do only business work; it doesn’t have to be a separate room or have a separate entrance.

MEALS AND ENTERTAINMENT — IRS examples include:
–meals where you meet with an interview subject, agent, editor, agent, manager, lawyer, accountant, or with colleagues at an event or retreat to do with your work
–meals while traveling to gigs, workshops, etc.
–tickets to performances that relate to your work

ADVERTISING — IRS examples include:
–promotional photos and videos
–brochures, mailers, flyers
–newspaper, magazine, TV, radio ads
–fees for listing services, PR services
–website creation and hosting expenses (Music Teachers Helper can fit in here or see below under Supplies)
–promotional giveaways such as CDs (deduct your cost)
–signs, banners, bumperstickers
–stationery
–ads on the web, in Yellow Pages
–marketing emails or direct mail
–costs for promotional events
–business cards

SUPPLIES — IRS examples include:
–music stands, cases, gig bags, transportation carts
–reeds, picks, oil, strings
–sheet music, music paper, notebooks
–tuners, effects pedals, metronomes
–mutes, mouthpieces, microphones
–books for a curriculum
–monitors, amplifiers, speakers
–blank media, CDs, tapes, recorders, memory cards
–performance wardrobe
–cords, cables
–music filing envelopes and boxes
–bottled water for performances
–reference books, study guides
–GPS systems, map guides
–pens, pencils, paper, paper clips, tape, staples, staplers
–printer supplies
–whiteboard, markers
–stamps, labels, envelopes, mailers
–software for keeping track of billing and expenses (Music Teachers Helper could fit in here or see above under Advertising — as long as you don’t duplicate your expense, either category is justifiable)

OFFICE — IRS examples include:
–business membership fees to superstores like Costco & Sam’s Club
–pickup and delivery services
–bottled water delivery
–costs for backing up data
–office decorating expenses
–cable line if separate for your office

DUES, LICENSES AND FEES — IRS examples include:
–copyright fees
–union dues
–social security, medicare and unemployment taxes
–professional license fees
–fees for professional organizations

Posted in Financial Business, Studio Management |

About the Author

Ed Pearlman has focused on performing, teaching, and judging fiddle music for over 30 years, offering performances and workshops throughout the USA and in Canada and Scotland. His original training was with members of the Chicago and Boston Symphonies, and he played with orchestras and chamber groups at Yale and in Boston. He currently teaches privately at two music schools affiliated with music stores in Maine. Ed directed the Boston Scottish Fiddle Club in monthly workshops for 18 years, directed major concerts and festivals, and recorded 2 solo CDs and several with a fiddle orchestra and top soloists. In addition to Scottish and Cape Breton fiddle styles, Ed plays other Celtic, American, and Canadian fiddle music, classical and some jazz, klez and Hungarian. Ed created and for 11 years ran a CD distribution company to bring music to the USA from Scotland, Atlantic Canada, Ireland, Brittany and Wales. He's the music columnist for Scottish Life magazine.

22 Comments (Add Comment)

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I should have mentioned that if you claim mileage deductions or a home office there are special forms involved, which is why I like tax software because it handles that correctly for us.

Also, I didn't mention some of the more self-explanatory expenses, but here they are in case it's helpful:

Schedule C deductions--
Line 11 for contract labor (if you get the full pay for a gig and then pay other musicians); line 15 for instrument insurance; line 17 for legal & professional services (accountant, piano tuner); line 20a for renting a car; line 20b for studio rent; line 21 for repairs/maintenance (fixing instrument, rehairing bow, etc.); line 24a for travel (airfare, bus, lodging); miscellaneous expenses could include continuing education programs.
by Ed Pearlman — Sat Mar 7, 2009 @ 10:31 am
One more thing! The IRS says it's fine to deduct dues & subscriptions but there's isn't actually a line for it, so as far as I know, it has to go into miscellanous ("other expenses", line 27).
by Ed Pearlman — Sat Mar 7, 2009 @ 10:38 am
don't forget to log your miles....the Mileage Logger is a device that automatically logs your miles through GPS networks and allows you to log onto a secure website and sort your trips according to business, charity, medical, etc. This allows you to accurately file with the IRS and lets you stop worrying about writing down odometer readings.
by natalie — Mon Mar 9, 2009 @ 10:45 am
The gallery is really great!
by Shazia — Thu Mar 12, 2009 @ 7:12 am
A couple of questions I have:

1) What is the 'Prinicipal Business' code that I should use for 1040 schedule C, Box B? I'm a private music instructor as well as a musician. Should I use code 611000 (Educational Service) or 711510 (independent artist)?

2) Am I able to combine my expenses that I have as a music instructor along with expenses as a musician? The only reason why I ask is that I make money as an instructor, but barely any as a performer.

thanks!
by Arthur — Sun Mar 15, 2009 @ 1:31 pm
@Arthur: I'll tell you what I do, and then I guess I should put in the disclaimer that I'm not an accountant etc etc. I use 711510 because I do both teaching and performing. And in my opinion it makes sense to combine expenses as instructor and as performer, provided that you are including the income from both on the same schedule C.
by Ed Pearlman — Mon Mar 16, 2009 @ 12:34 pm
Dear Ed, I wanted to start teaching piano in my apartment, as a supplemental income in addition to my part-time office job, and have purchased a very expensive piano for that purpose, in November of 2008. Since it was the end of the year, I taught only 2 lessons in December, for $80. Can I claim this piano purchase on my 2008 taxes? I don't know if this matters, but I will be filing joint taxes because I got married last year, and we also had a baby so I will be claiming my baby as a dependent. What is it that I need to file? Can I even file C schedule for myself if I am filing joint taxes, and if I made such little income? Also, this piano is not going to depreciate in the next 5 years (I got some answers that I should depreciate over next 5 years), its value will only go up. Could I deduct all $15K, or only what I am sending monthly for the piano loan (which is $200 per month). THANKS!
by Arthur PL — Wed Apr 1, 2009 @ 8:16 am
Also, I should tell you that I am a professional pianist and a piano teacher, with a part-time office job.
by Arthur PL — Wed Apr 1, 2009 @ 8:18 am
@Arthur: I can make a few comments to help, but the tax laws change every year, so unless you just have W-2 wages and an easy return, it's pretty important to check with an accountant or a tax preparer like HRBlock, or to use a tax software like Turbotax Home & Business that can take you through the steps and answer questions. You're still responsible for doing it right, the moment you sign the return. Tax preparers and even software will take some responsibility if they make a mistake. Anyway, you can't deduct the full price of the piano if a loan covered it, and you'd have to find out if you can deduct the loan payments. The problem here is that when you buy a piano it's an asset, not an expense, meaning that you parted with the cash but the $15K is still yours except it's in the form of a piano (of course if it's paid by loan, it's not quite yours). That's why people talk about depreciation, because it is what you do with assets, and it's a little tricky and doesn't always have to do with market value. There are some rules about letting small businesses deduct investments like that as one-time expenses so an expert can help you with that. But usually people do that when it helps their taxes--if it just means a big loss for you, it might not help too much. In fact, there are rules about losses--at some point the IRS will not honor your Schedule C as a business if it loses money too many years (twice? three times? not sure where they're at now)--they regard it as a hobby you spend money on. Yes it's normal to do a Schedule C for each business you have if they have different names or purposes (performer/teacher can fit in one, I think) in addition to the normal From 1040 joint taxes form. Hope this helps a bit. Good luck!
by Ed Pearlman — Thu Apr 2, 2009 @ 11:42 am
I travel a lot performing, and now am bringing along my infant to the gigs. Can I deduct his travel expenses on Schedule C (mostly plane tickets)? What about child care costs on the road?
by Elizabeth — Wed Apr 29, 2009 @ 1:54 pm
@Elizabeth -- again, I can't be the final expert here but generally if you can show that expenses are necessary to your work then you should be able to deduct them, but there are some rules about child care expenses. The IRS does answer questions like this over the phone and also has online publications you can search for information. I think the child care costs might require receipts from a registered child care provider - I'm not sure on this, but it's the kind of thing you should look into now, so that when it comes time to do the taxes you have the right receipts to be able to take the deductions. The whole point of the deductions is to reduce your income by the amount it costs you to do business (if the costs are necessary).
by Ed Pearlman — Wed Apr 29, 2009 @ 7:39 pm
As a musical instructor, are you filing as an independent contractor?
by TM — Mon Sep 14, 2009 @ 8:23 pm
@TM: I personally file a schedule C as a self-employed person. Where the "independent contractor" question comes into play as an instructor is when I teach at a location that is advertised at a school. To be an independent contractor there, the school can't have too much control over what you do, though it can have some policies. At one place I taught, people did pay the school and the school paid instructors, but lessons were arranged by the instructor and the instructor submitted timesheets to indicate what lessons were taught, so that they could be paid. These timesheets were considered invoices submitted by independent contractors for their work. There were no salaries. It can be a fine line, so it's best to check with the school, an accountant, and/or the IRS help desk if you have questions. If you pay rent for a teaching studio and collect your students' payments there's no question you're self-employed. Hope this helps.
by Ed Pearlman — Mon Sep 14, 2009 @ 8:48 pm
Do you have to do anything to "become" an independent contractor? Are there any forms to fill out or anything of that nature?

Thanks!
by Nick — Sat Sep 26, 2009 @ 12:33 pm
I am wondering the same thing as my last question but for self-employment.
by Nick — Sat Sep 26, 2009 @ 12:39 pm
First of all, thank you SO much for this site! I just discovered it - and have learned a lot already.

I have a question as well.
I am a piano teacher, who travels to people houses. My husband and I are about to rent an apartment - and I want to teach from home. If we rent a one-bedroom (for two of us and potentially a child) - can I still claim that one of the rooms (living room) is my studio and deduct it in taxes? Or should I go for a two-bedroom. Will I be getting a bigger tax break with a two bedroom? My questions might sound like nonsense - I apologize, if they do.
Thank you so much again.
by Veronika — Tue Jan 12, 2010 @ 10:33 am
I want to try clarifying my question. Will it be difficult/not possible to claim our living room as my studio (since we will spend some time there for other purposes) or if it is a big living room I can use part of it as my studio? Or should I just get a second bedroom and use it as my studio?
by Veronika — Tue Jan 12, 2010 @ 10:50 am
@Nick: An independent contractor or self-employed person, as far as taxes go, files a Schedule C (unless they are incorporated and not a sole proprietor, in which case check with your lawyer and accountant about taxes). You don't file Schedule C for income that's reported on W-2 forms from an employer, just on income of your own and income reported on 1099 forms. Different states have different rules about what constitutes an independent contractor, and so does the IRS - this has to do with how you are paid by a school you teach at or a project you do for someone and usually is more their headache than yours (e.g. they can be fined if they claim you as an independent contractor when the state thinks you should have been defined as an employee).

@Veronika: I think the rules for office in the home have been changing. At one point you couldn't claim business deductions unless your work space had a separate entrance and was not used for nonbusiness activities. Now I think the separate entrance is not necessary but you'll need to check the latest rules about whether you can claim a space that has multiple uses. If you have a separate room for dedicated use as a teaching/practicing/gig making studio, I believe (but please double check!) that you can claim that percentage of your floor space, and that same percentage of your utilities as an office-in-the-home deduction. They are kind of particular about the rules, so that this deduction isn't abused. If you're deciding on where you live based on this, you should make sure you understand the latest rules and make sure the deductions are really worth the extra rent you might have to pay.
by Ed Pearlman — Tue Jan 12, 2010 @ 12:22 pm
I was just wondering if you had any suggestions on which category the following expenses would be listed on the schedule C:

Recital costs (accompanist, AV personnel, certificate of awards for students)

Piano maintenance (piano moving, tuning)

Great site, by the way... thanks in advance for your help!
by sarah — Fri Jan 15, 2010 @ 10:54 am
@Sarah: Here are my thoughts but always I have to make clear I'm not an accountant! You could deduct the accompanist, AV personnel, piano movers, and piano tuning under "Legal and Professional Fees" or possibly "Commissions and Fees"; the certificate of awards would be under "Supplies". One website you could check for more ideas is http://biztaxlaw.about.com/od/taxdeductionsatoz/Business_Tax_Deductions_A_to_Z.htm
by Ed Pearlman — Fri Jan 15, 2010 @ 12:00 pm
I'm an employee in the music field and also independent contractor. I have both W2 and 1099 misc. My question is, can I deduct my SE tax ? If I do that from my W2 withholdings, I can save plenty. If the answer is yes, from what line on 1040 or elsewhere.
Also I heard there's a 7.65% deduction to independent contractors, is that true? and what line ?
Thanks for your cooperation
by Pete Dakoglou — Sun Feb 21, 2010 @ 9:37 am
@Pete: Once you figure out your self-employment tax on Schedule SE, you can deduct half of it on Form 1040, line 27. This affects your adjusted gross income, from which your tax is calculated, but you still have to enter and pay the full self-employment tax on line 56. As to the 7.65% deduction you've heard about, that's just another way of saying the same thing about self-employment tax, because the self-employment tax is 15.3% of your net profit, and when you deduct half of it on line 27, you're deducting 7.65% of your net profit.
by Ed Pearlman — Tue Mar 2, 2010 @ 9:29 pm

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Specifics on Musicians’ Tax Deductions

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