IRS Help for Musicians – Learn about your IRS advantages and get your great break Part I
rocking out: It’s hard to make it in show business. If you’re a musician, you may be looking for all the help you can get. Did you know that the IRS can give you a helping hand? If you play your cards right, you can receive a lot of deductions doing what you love best.
Classifying it: What is making music for you? Is it your hobby? Or is it your business? If it is your business, you have clear tax advantages. If your music is your business, you can usually deduct the cost of your equipment and other expenses on your tax return. If it’s your hobby, you can only deduct up to the amount of income you earn from your music.
Playing the role: If you have decided that your music is your business, you have to be prepared. The IRS is going to attack your claim. They are aggressive about saving money, so you have to play the part. Make sure you know exactly what you can deduct as expenses. You must also report all of your earnings. Here are some good ways to make sure all of this gets done:
-Seeking professional tax help
– Hiring an accountant or bookkeeper
It’s also a good idea:
-Obtain a business license
-Keep business cards handy.
-Advertise your band
-Join organizations and unions of musicians.
-Copyright your music
*Save all documents related to your business. You’ll need them to prove that your music is really your business if the IRS gives you trouble.
file correctly: If you want to deduct your music expenses, complete Schedule C and file it with Form 1040. If you are self-employed, file Schedule SE as well. If your net income is over $400, you must also pay self-employment tax.
rock on: This is the first part to know the advantages of the IRS when you are a musician. Part II will discuss what you can deduct and ways to prove to the IRS that your music is really your business. I will also list ways to be prepared for questions from the IRS.
Now you have the smoking gun… Use it!
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