Disclaimer: The information contained in this article is general legal information only. Consult your attorney for all specific considerations.
Musicians are good at a lot of things. Unfortunately, taxes and accounting don’t often make the top of that list. But fret not, my talented friends! I have come to bestow a wealth of knowledge upon you from the land of the music business! So here it goes in a nutshell…
As a working musician, you are considered “self-employed” in the eyes of the IRS. Along with this status comes a whole bunch of requirements for how to file your taxes and what kinds of deductions you're eligible to take. Professional musicians actually have a number of things they can write off that are unique, and the goal – as with any taxpayer – is to lower your tax bill as much as possible!
According to the IRS, you may deduct business expenses as long as they are:
- incurred in connection with your trade, business, or profession
- ordinary and necessary
- not lavish or extravagant under the circumstances
With that in mind, here are four big tax write-offs that all performers should start taking advantage of right now.
1. Travel and meals
All expenses associated with overnight travel are deductible for professional musicians. This includes your lodging and meals (50 percent deductible). The caveat with this is that the travel must be far enough away from home that it would be inconvenient to return back at night.
Travel can include expenses related to performances, auditions, recording sessions, etc. Meals must be directly due to a business discussion, such as meetings over food/drinks with agents, fellow musicians, venue owners, promoters, producers, accountants, lawyers, etc. During these meals, discussions around topics like gig opportunities, band schedules, music arrangements, marketing, and career planning are some of the business purposes that should be documented through receipts and written record in order to properly claim the deduction.
2. Vehicle expenses
There are two ways that vehicle expenses can be utilized toward tax deductions for musicians:
- Write off mileage. The defined allowance by the IRS is currently set at 57.5 cents a mile. In order to claim this expense, you must keep a detailed diary of all distances driven and the business purpose of the trips. This is beneficial toward travel incurred for performances, rehearsals, to pick up equipment, etc.
- Directly write off automobile expenses, like the costs of vehicle depreciation, gas, insurance, repairs, tour buses, etc.
3. Music gear
You can write off your necessary equipment purchases, including instruments, PA systems, cables, mics, music books, and everything in between. Depending on the type of equipment, the depreciation can be written off between one and seven years. As of 2014, the IRS allows taxpayers to “expense” up to $500,000 of equipment, and you're able to write off the full cost of the purchase!
4. Home studio/office
If you use a room in your home exclusively for your music business, then you may be in luck to qualify for a home office deduction! This room could be used as a rehearsal space, home recording studio, equipment storage, teaching space, or office for record keeping, accounting, meetings… you get the idea.
The formula for calculating the home office deduction is based on the square footage of the business portion of the home vs. the total square footage of the home, and that percentage is applied to all associated costs like rent, mortgage interest, condo feeds, utilities, insurance, repairs, etc. So as long as you have a space solely dedicated to your music, you'll be able to take advantage of this very important tax deduction as well!
- Taxes 101: What Self-Employed Musicians Need to Know
- How to Form Your Band as an LLC
- 4 Tax Deduction Tips to Maximize Your Band’s Income
Christine Occhino is the founder and artistic director of The Pop Music Academy and has experience working at Columbia Records/Sony Music Entertainment, in addition to working as a performing artist for over a decade. She has a bachelor's degree in music business & management with a concentration in entrepreneurship and vocal performance from Berklee College of Music, where she was a vocal scholarship recipient and former editor-in-chief of The Berklee Groove. She is also the proud founder and CEO of Hope In Harmony, a 501(c)(3) nonprofit organization that brings music to those in need.