Can you make melodic sounds on your sweet saxophone? Do you strum your way to a living on your electric guitar? Or, are you an expert at covering Billy Joel’s Piano Man on your harmonica?
No matter where your musical magic takes you, it’s critical that you take advantage of all tax tips and tax deductions for musicians to stay IRS compliant and keep more money to travel to future gigs. Surviving as a musician can be tough: these tips can help you become more successful doing what you love.
Tax Tips for Musicians
- If your music playing is more of a hobby that you don’t make money doing, you cannot claim any tax deductions or benefits for these activities.
- If you make a living for yourself as a musician, or even if it’s a side gig, you should be eligible to claim certain tax deductions and benefits for your expenditures.
- If you work as a musician, it’s critical to maintain solid records to verify your eligibility for certain IRS tax benefits. Records include receipts, invoices, and tax-related documents, such as copies of Form 1099.
- If you conduct work as a musician in your home state and in other states, you’ll face state income tax filings for those specific states. For example, if you live in North Carolina and get a paycheck for performing in South Carolina, you must file state income taxes for this work based on South Carolina’s tax requirements.
- Proceed with caution when claiming the home office deduction, unless you have a recording studio in your home. The IRS generally considers a place of work for a musician to be wherever he or she performs, such as on stage in an auditorium or at a private party. If you give music lessons in your home, you may be safer claiming the home office deduction.
- Consider incorporating your music business. It shows that you are serious about practicing your trade, and you may be eligible for additional tax benefits. Incorporating is particularly appropriate for bands and music teachers, but it’s a good option for individual performers as well. An LLC can serve as a solid business platform for your work.
Tax Deductions for Musicians
If you meet the IRS requirements to write off costs you incur for your musical endeavors, consider claiming the following ordinary and necessary expenses as a tax deduction that allow you to conduct your trade.
- Instruments, i.e. guitars, banjos, pianos, harmonicas, etc.
- Equipment, gear, and accessories, i.e. microphones, amps, pedals, carrying cases, recording devices, music stands, etc.
- Consumable supplies, i.e. drumsticks, guitar strings, guitar picks
- Sheet music, books, manuals, computer software, mobile apps
- Copyright and/or registration fees for your music
- Costs to provide instruction or lessons to students
- Subscriptions to relevant music publications
- Marketing and promotional materials for your music or musical trade
- Rent for practice space and storing equipment
- Membership fees paid to professional music organizations and unions
- Travel expenses
- Professional fees for agents, attorneys, accountants, etc.