 The Clarinet BBoard
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Author: William
Date: 2009-04-06 16:52
Just sitting here wishing that the time I spend reading/writting on this BB was somehow (time/rate??) tax deductable.
Perhaps sharing some of our real tax deductables would be of interest, given the approaching April 15 deadline. Some of mine are mostly the usual: Instrument depreciation, repair, maintainance, purchase; equipement purchase--reeds, mpcies, ligs, music, etc, anything related to making $$ with my instruments; travel expenses; educational expense to learn new musical skills or maintain the ones I have;
Anyone have anything to add to my listing of deductables??
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Author: Chris J
Date: 2009-04-06 17:03
No idea what is deductible in USA, but if you have a "music room" in your house that is used for practice and work related activity, might that be deductible - that might bring in a percentage of some other expenses to offset tax such as burgular alarm, rent, rates, use of telephone.
If you have a partner, they could be employed for administrative support.
Do you have particular gig clothes? They need to be bought and cleaned.
Chris
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Author: Don Berger
Date: 2009-04-06 17:31
Fine idea, Wm, to point our possible tax deductions for pro musicians et al. I can no longer claim any of that, but want to add, Dont Forget the "Born before 1-2-44 additional Standard Deduction allowance, and/or, if you have "qualified" capital gains, that method of tax calculation should be used and will reduce the tax "bite" . This is from our CPA daughter who will file our returns this weekend. ?Happy Days, Don
Thanx, Mark, Don
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Author: mrn
Date: 2009-04-06 18:20
Chris J wrote:
<<No idea what is deductible in USA, but if you have a "music room" in your house that is used for practice and work related activity, might that be deductible - that might bring in a percentage of some other expenses to offset tax such as burgular alarm, rent, rates, use of telephone.>>
There is a type of deduction for "business use of your home" in the U.S. which works on a percentage square footage basis. People who run businesses out of their homes use this to deduct expenses associated with their home office.
You'd have to do research or consult a tax professional to see how this works for musicians, though. Does practice by a professional musician count as "business"? Does it make a difference if you are a freelance musician, let's say, as opposed to a full-time orchestra member or a music professor? Does it make a difference if you sometimes teach lessons out of the "music room" in your house? Or compose music? These are all questions for the professionals. I don't practice tax law so I don't really know.
What I have heard, though, is that questionable business deductions are a red flag for the IRS and if there's any way they can try to argue that something is a hobby rather than a business, they will bend over backwards to do so, even if their reasoning doesn't make much sense to you or me. Caution in this area is well advised!
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Author: sweettea
Date: 2009-04-06 18:28
Chris J wrote:
" What I have heard, though, is that questionable business deductions are a red flag for the IRS and if there's any way they can try to argue that something is a hobby rather than a business, they will bend over backwards to do so, even if their reasoning doesn't make much sense to you or me. Caution in this area is well advised!"
That is what all the experts say, Chris, good observation. My husband & I have worked from our home for years, and have never used the "business use of your home" deduction. Kind of sad, I know, as it is a legitimate deduction, but the audit flags start waving. We prefer to keep our lives as free from unnecessary complications as possible.
If only I could find a way to deduct the purchase of a new instrument....as I do not play professionally, it would be difficult.
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Author: Matt Locker
Date: 2009-04-06 19:04
"Business use at home" means that are of the house is used for nothing else. Unless you can show that definitively, it's not worth risking the audit.
MOO,
Matt
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Author: Katrina
Date: 2009-04-06 20:08
My accountant runs the "business use of home" through and _so far_ I haven't had a problem. I use one room for teaching, and since it has my piano in it I've used it for some arranging, but since that's for stuff I make money at, it works out ok.
A percentage of utilities and upkeep based on the sq footage of the room vis-a-vis the whole house is used for "business use at home."
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Author: Joseph Brenner, Jr.
Date: 2009-04-06 21:18
The front page of today's NY Times includes an article about Larry Summers's post-Harvard, pre-White House stint with D.E. Shaw company, where he advised the company about hedge funds and made a ton of money as well. Someone close to him observes that Summers always first paid his Social Security taxes and, not only did not cross the line on what is permissible under the tax law, but never, never, never even approached the line separating the permissible from the unlawful. As a lawyer, I know only too well how dynamic and complex law is. What may have been deductible five years ago may very well be subject to taxation today--especially in today's economic and regulatory climate.
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