Financial Business

Hey gang,

Thanks to Michelle Payne and Ed Pearlman for starting the dialogue about taxes in their recent blog posts. I am going to expound further on Ed and Michelle’s blogs. They showed you what you can deduct, I’m going to offer suggestions on how keep all of your records organized so they are easy to deal with at tax time.  I can’t say this will definitely work for you, but I know this system works for me.  Staying organized and doing minor tax prep tasks year round will make tax time less stressful.

I own a fanfold file folder and several plastic file boxes. The fanfold folder is setup in this manner: [···]

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Many thanks to Michelle for her recent helpful and readable post about tax deductions.  I can see by the comments that (no surprise) there’s some confusion as to how to interpret things.

I’ve personally found it a little confusing, even if I know what to deduct.  Which category of deduction do I put Music Teachers Helper in, for example?  See below.  What I’ve done here is to reproduce some examples from IRS publications for you.  The IRS even specifies some expenses that are suitable for musicians.

Consulting an accountant is usually a good idea because these are only examples and there may be specific situations that you will need clarification on.  My preference, instead of paying an accountant, has been for many years to use a good accounting software because it takes you through all the steps, asks all the questions, incorporates all the latest changes, and makes sure that you have everything right, and explains things if you’re not sure.  I’ve found that TurboTax has done a great job for me–here is a link to getting TurboTax if you’re interested.  It includes your state forms and efile as well. (It’s deductible, too, of course!)

Business deductions are relevant to musicians who use Schedule C on their taxes, which you need to do unless all your income is from wages on W2 forms.  The deductions below are broken into these categories:  Mileage, Home Office, Meals and Entertainment, Advertising, Supplies, Office, Dues & Fees.  Remember that you need receipts for everything, to back up your claims.

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