Hiring studio musicians to help fill out the sound for your recording? Organizing a group to play for your wedding or a party? Whether you’re a musician hiring fellow musicians for a gig, or an event organizer hiring musicians to entertain your guests or clients, here are some tips to make your life – and the lives of your musicians – easier when it comes time for payment and tax season.
As the person writing the check, there are tax forms that you need to collect and send out in order to correctly pay freelance musicians or to hire a group as employees. In general, the tax forms commonly encountered when paying musicians fall into two categories:
- Forms you collect from the musicians
- Forms you send to the musicians/IRS in the months leading up to the April 15 tax deadline
Taxes can get complicated fast, especially if you have employees or use the services of lots of freelancers (aka, independent contractors), so always make sure to consult a tax professional about your specific tax situation.
Forms you collect from musicians
If you use the services of freelancers (read this if you're not sure whether your musicians qualify as freelancers), you must ask them to fill out a W9 or W8-BEN (W8-BEN is typically used by individuals who are not US citizens or US residents). Businesses are required to keep track of and report who they pay for services and how much they pay them. When paying freelancers, you'll need the information from the W9 in order to complete your requirement to send a Form 1099 to the musicians in the months prior to the tax deadline on April 15. The IRS usually requires that you send a Form 1099 to anyone to whom you have paid at least $600 for services over the course of your tax year.
W4: paying employees
If you have employees, you must ask them to fill out a W4 and return it to you when they begin to work for you. This form allows them to specify how much the business should withhold from their paychecks for taxes. The information on this form not only helps you determine how to structure their paycheck and taxes, but it also helps you with information needed to fill out a W2, which you'll send to your employees each year sometime in the three months prior to the tax filing deadline.
Forms you send to musicians (usually by January or February)
1099-MISC: if you paid the musician $600+ over the course of the year and/or paid him or her royalties of $10+
If you employ the services of freelancers, you may be required to send out 1099 forms, with copies going to both the freelancers and to the IRS. The 1099 details how much money the freelancers earned for performing services (including parts and labor) or royalties. You need to send these forms to freelancers to whom you have paid at least $600 over the course of the year (or if you have given them at least $10 in royalty payments). Check with the IRS for due dates, but you're typically required to send out these forms by late January. Your musicians need these forms to do their own taxes, so to keep on their good side, get these forms sent out sooner rather than later.
W2: For your part-time or full-time employees
These forms detail how much money you paid to employees and how much you withheld from their checks for state and federal taxes as a result of the withholding choices they made on their W4 forms. Your employees need the information from these forms when doing their taxes.
Note: The deadlines for filing the 1099s and W2s is much earlier than April 15. Depending on your filing method (online vs. paper), the deadlines for sending these forms to your musicians (and to the IRS) can start as early as January.
Questions about other tax forms?
As a musician, your business taxes can be complicated, especially when your business has employees and/or hires freelancers. Talk to a tax professional about how to manage your employment taxes and which forms you need to submit by the deadlines. For more information on specific aspects of the tax forms you need for your business, read these pages on the IRS website:
If you're a self-employed musician or member of a partnership, read my article, "Taxes 101: What Self-Employed Musicians Need to Know," for the basics on what forms you'll need to file.
Jamie Davis-Ponce is a professional musician and graduate of Northeastern University's Master of Music Industry Leadership program with a concentration in entrepreneurship. She has been a music lecturer at Ithaca College, and is deeply involved in Boston-area arts and music organizations, having worked with ArtsBoston and held internships at Handel & Haydn Society and Boston Symphony Orchestra. Jamie is currently an administrator in the Professional Performance Division at Berklee College of Music. You can view more of her writing on her blog on Music, Business, and Creativity.