 The Clarinet BBoard
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Author: sfalexi
Date: 2007-03-28 20:02
So it's tax-season . . . and I filed without taking it into consideration already. But what receipts should I hold onto for next year? Do they have to be from stores? If I bought something off of ebay, can I claim my paypal receipt? Can certain CDs be deducted as educational and research items? Just wondering. I'm making some serious purchases this year ('07) and I want to know what can help me for next year's tax season. Thanks.
Alexi
US Army Japan Band
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Author: Katrina
Date: 2007-03-28 20:17
Yes.
But be sure to talk to a professional tax person/CPA. They will know what's allowed or not. Definitely keep receipts. Reeds, equipment, instruments, sheet music, CDs, DVDs, books, magazines, etc., etc.
I believe you can write off stuff you buy online at Ebay too, as long as it's documented properly in case of auditing.
I just wish I could write off clothes that I only use for performing! Those, apparently, are too multi-purpose...
Also if you teach, you can write off things which keep your schedule, organize you (binders, etc.)...
Katrina
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Author: Mark Charette
Date: 2007-03-28 20:37
sfalexi wrote:
> So it's tax-season . . . and I filed without taking it into
> consideration already.
1040-X
> But what receipts should I hold onto
> for next year? Do they have to be from stores? If I bought
> something off of ebay, can I claim my paypal receipt? Can
> certain CDs be deducted as educational and research items?
> Just wondering. I'm making some serious purchases this year
> ('07) and I want to know what can help me for next year's tax
> season. Thanks.
Please consult a tax advisor - if one of our readers is a tax professional and willing to help, please contact sfalexi off-line. Since you're in the military, there may be other special rules that apply.
Messing up taxes can cause years of problems ... even not messing up on your taxes can cause years of problems ...
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Author: claritoot26
Date: 2007-03-28 22:08
My dad is a retired CPA and did my taxes. Other things that are deductible not mentioned above are union and professional association dues, professional conference registration fees; mileage, public transportation, and parking expenses for gigs, teaching lessons, auditions, conferences. All instruments, reeds, accessories, sheet music, accompanist and hall rental fees that you use for your profession are deductible.
It's best to keep track of all of this stuff regularly. I have a spreadsheet on my computer for all of these expenses that I try to keep up with throughout the year. A PDA might be even better, if you can get in the habit of carrying it with you and tracking everything as you do it.
In some cases, cell phone expenses are tax deductible, but do follow everyone else's advice and contact a professional CPA or tax adviser.
In the meantime, you can start tracking all your expenses and income.
Doing taxes can be quite "taxing", especially for musicians and self-employed people.
-Claritoot26
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Author: Gandalfe
Date: 2007-03-28 22:59
Seriously team, get a decent tax advisor to weigh in on this matter. The rules change almost every year. That said, I've never had to pay a tax preparer more that I saved. It's a great investment assuming you get a good professional.
Jim and Suzy
Pacifica Big Band
Seattle, Washington
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Author: Terry Stibal
Date: 2007-03-29 01:19
One thing to keep in mind is that most who do not have a "normal" amount of home loan interest are not going to be able to itemize their taxes (1040 "long form"). Consult with a professional, certainly, but this "rule of thumb" pretty well mitigates against bothering for those without a home in their financial portfolio.
If you have a "business" that is not a "hobby" (and the IRS gets to make the call on that, using (in part) the "three profitable years out of five" test), those expenses are deductible against the profit that you make from the business, regardless of your standard deduction status. A bit more complex than doing it with a home mortgage interest deduction, but still legal.
One thing that is a certainty: if you purchase something in the piece of equipment category, something with an extended life span (like a new horn), you don't "deduct" it like supplies needed on an on-going basis (like reeds or cork grease). Instead, you enter the wonderful world of depreciation, Section 179 deductions and the like. While tax software can simplify this, it is very important to be sure that you are allowed to do it in the first place. )You also have to track residual value when you dispose of something so expensed, at least according to the IRS.)
There are also some special rules regarding some "artist expenses". In my experience, not every tax preparation "professional" is up on stuff like this (or on that all important Section 179 for depreciation). (They make their bread and butter income dealing with white bread tax payers who don't want the fuss and bother of filing.) You may need to go further than your garden variety of tax preparer in order to get the "straight dope".
And, no, I am not a tax preparer. However, I have consulted with entertainment tax people in the past, and run a musical business. While I feel comfortable with filing my own taxes on these matters, I still rely on "experts" advice on specifics, such as "Is the piano bench part of the piano outfit, and thus part of the Section 179 amount?" and/or "What about cocktail or formal gowns worn while performing: deductible or not?"
leader of Houston's Sounds Of The South Dance Orchestra
info@sotsdo.com
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Author: Brenda ★2017
Date: 2007-03-29 14:28
Once you've done your research, kept your receipts, consulted a professional, keep in mind that the IRS (or CRA) auditor who happens to get your file isn't infallible. In our office we've found that it really depends on whose desk your file lands on, and whether they're feeling especially macho that day. Our boss has taken many, many cases to tax court and won on behalf of our clients. On occasion he has been stunned at the arrogance of auditors who have big titles (he's jaded now and isn't stunned so much anymore), but when questioned in court in front of a judge are found to have inadequate training for their job, or have a very narrow view of a deductible expense. Some cases disgusted the judge so much that he'd dismiss the case. Occasionally we find that the government will often turn around and change the tax law. Too bad we can't do that when we lose a case.
So what I'm saying is this: Always work within the tax law, but if you have printed documentation from the tax department on how to handle an issue, don't be afraid of the tax man - as long as you and your accountant are willing to appeal or to take an issue to tax court!
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Author: grifffinity
Date: 2007-03-29 15:57
Best resource is IRS.gov website and then consult a tax professional for clarification, as these rules can be a bit confusing to read your first time out. As stated above, some "tax professionals" are not savy about concert artists matters, so best to do your own research on the irs site. Also, the fact you are in the military, your clothing deductions vary from what is allowed for a concert artist.
http://www.irs.gov/publications/p529/ar02.html
Some excerpts from the page:
"Performing artists. If you are a qualified performing artist, you may be able to deduct your employee business expenses as an adjustment to income rather than as a miscellaneous itemized deduction. See Performing Artists under Deductions Not Subject to the 2% Limit, later. "
"Musicians and entertainers can deduct the cost of theatrical clothing and accessories that are not suitable for everyday wear. "
"Military uniforms. You generally cannot deduct the cost of your uniforms if you are on full-time active duty in the armed forces.
If local military rules do not allow you to wear fatigue uniforms when you are off duty, you can deduct the amount by which the cost of buying and keeping up these uniforms is more than the uniform allowance you receive. "
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Author: Brenda ★2017
Date: 2007-03-29 18:06
According to Canadian tax laws the suitability of clothing for everyday wear is also part of the criteria for deductible expenses. For example, a Hydro repair person who wears heavy winter clothing regularly on outdoor jobs cannot deduct clothing costs, neither can a roofer who goes through 6 pairs of sneakers a year. A local country-western performer was denied a deduction for western boots and jeans, although he used these on stage - these items can be used on the street. Most people will insist on deducting them but it's a gamble whether or not they'll be called on it and have the deduction disallowed. Obvious deductible clothing items are steel-toed boots, construction hats, special work gloves, uniforms with company logos and so forth. There are special provisions for performers and their gowns used in modeling and so forth, but these provisions have to be looked up as they're quite specific to industries.
In Canada if an item is used less than 10% for personal use then there's no problem in deducting the whole cost as a business expense. So if a musician uses his well-worn tux to his buddy's wedding, he can jump up and down and demand to take the deduction for the tux. He might wear out his shiny shoes in the jumping, but most auditors don't have a problem with that.
This is how it's done here, it may give you an insight into what's possibly in the tax laws elsewhere.
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Author: clar502
Date: 2007-03-29 18:13
I have been deducting my concert clothing for years. At the advice of my tax advisor. I keep those clothing items only for performances. This includes black shoes. If I wear black for everyday, which I seldom do, those clothing items are seperate and not an expense. My husband deducts the cleaning of his tuxedo and wing collar shirts. I keep all receipts, of course.
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Author: sfalexi
Date: 2007-03-29 18:27
For those who hopefully are still reading this and have successfully deducted cost of items from taxes, was it done in person? Or have you been able to do it over the internet? Reason I ask is because my next duty station is going to be Korea.
Alexi
US Army Japan Band
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Author: Terry Stibal
Date: 2007-03-29 18:57
With the clothing, I have two sets of formal wear (tail coat, and dinner jacket), both of which are deductible for tax purposes (purchase, cleaning, repairs and alterations). In the case of my lovely wife and our two female singers, I have been told that the cost of formal wear (in general lay terms, "long" gowns) used for performance purposes can be taken against your income, but that cocktail or "tea length" dresses cannot. The theory here is that the former cannot be worn in day- to-day situations, while the latter can.
(Just what the opinion would be if you regularly attended functions where white or black tie (or, for the ladies, formal gowns) is required, I don't know. To me, that a tax lawyer knew what "tea length" meant was more surprising than the way the interpretation fell.)
My group also have an "informal" look, this involving monogrammed logo shirts for the musicians and vocalists. However, we hold the shirts as part of the business inventory and supply them as occasions require, picking them up afterwards. Even though they could be worn otherwise, there's no question that they are a business expense and thus deductible against the income of the group. The members (individual contractors all) cannot deduct them from their taxes, however.
I've had the same sort of opinions given by a tax attorney for clothing that I wear for my day to day work. (I'm a manager with OSHA, the Federal safety and health enforcement agency.) Regular work clothing (shirts and pants and the like) can be worn during day to day activities, even though they may be greasy and otherwise something you'd not be caught dead in. Similarly, most safety shoes and boots fit this definition.
Where there is a bright line is with coverall wear (either flame retardant clothing (for the refineries and chemical plants) or all cotton coveralls (for the rest of the filthy places)). Those are clearly not suited for street wear. And, the same holds true for various special types of footwear, such as caulked logging boots (nasty things that I hate to wear) or boots with metatarsal guards (worn in steel mills, on drilling rigs, and the like).
Push comes to shove, you need to consult with an attorney or "tax professional" before you start deducting things willy-nilly. And, make sure that you're telling the truth on those pesky Section 179 deductions, since they are audited with a closer eye than most tax items.
One other thing:
We track every music-related expense (postage, new reeds, advertising, mileage, copying, laminating, business cards, demo CDs, promo expenses, etc.) like a hawk. Each year we show a profit, but I try to keep that profit as close to the Social Security earnings tax limit as possible (this so we always add to our "quarters" total.) Nickels and dimes do add up.
I do all of my financial tracking (for both regular work and for musical work) in the Pocket Quicken program on my multi-duty personal digital assistant, uploading it into Quicken on the laptop during each billing cycle.
(The same PDA also maintains an indexed and easily searched listing of my band book (with who is ready to sing each number as needed), inventory, automotive mileage and even a neat little set timer, one that simultaneously counts up from 0:00 and down from 50:00, that sits just below my music front on the stage.)
The last year I checked, the "nickel and dime" stuff added up to an extra $350 reduction in income, worth about $100 in tax refund in our bracket. sometimes, sweating the little stuff pays...
leader of Houston's Sounds Of The South Dance Orchestra
info@sotsdo.com
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Author: Katrina
Date: 2007-03-29 19:59
As far as my performing clothes go, since I either wear "pit orch black" or "black pants/skirt + colorful top" and NOT evening wear, AND since I frequently wear the black item/s for my "biz-cazh" p/t day job...I don't get those...
Katrina
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