Blog

Specifics on Musicians’ Tax Deductions

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.
MILEAGE:  musicians and teachers often drive a great deal and this year you can deduct over 50 cents a mile.  You can’t deduct mileage if you’re “commuting”, in other words, if you’re an employee and drive to and from work.  But if you drive to other places than your primary place of work, or if you’re not an employee but work for yourself, you can deduct mileage as you drive to various locations for any business purposes.  The catch is that you have to keep a written log of your odometer readings, dates and destinations.

HOME OFFICE:  you can deduct utilities and other expenses for maintaining a home office space based on what percentage of the home it is, only if it is a space you regularly and exclusively use to meet with students or do only business work; it doesn’t have to be a separate room or have a separate entrance.

MEALS AND ENTERTAINMENT — IRS examples include:
–meals where you meet with an interview subject, agent, editor, agent, manager, lawyer, accountant, or with colleagues at an event or retreat to do with your work
–meals while traveling to gigs, workshops, etc.
–tickets to performances that relate to your work

ADVERTISING — IRS examples include:
–promotional photos and videos
–brochures, mailers, flyers
–newspaper, magazine, TV, radio ads
–fees for listing services, PR services
–website creation and hosting expenses (Music Teachers Helper can fit in here or see below under Supplies)
–promotional giveaways such as CDs (deduct your cost)
–signs, banners, bumperstickers
–stationery
–ads on the web, in Yellow Pages
–marketing emails or direct mail
–costs for promotional events
–business cards

SUPPLIES — IRS examples include:
–music stands, cases, gig bags, transportation carts
–reeds, picks, oil, strings
–sheet music, music paper, notebooks
–tuners, effects pedals, metronomes
–mutes, mouthpieces, microphones
–books for a curriculum
–monitors, amplifiers, speakers
–blank media, CDs, tapes, recorders, memory cards
–performance wardrobe
–cords, cables
–music filing envelopes and boxes
–bottled water for performances
–reference books, study guides
–GPS systems, map guides
–pens, pencils, paper, paper clips, tape, staples, staplers
–printer supplies
–whiteboard, markers
–stamps, labels, envelopes, mailers
–software for keeping track of billing and expenses (Music Teachers Helper could fit in here or see above under Advertising — as long as you don’t duplicate your expense, either category is justifiable)

OFFICE — IRS examples include:
–business membership fees to superstores like Costco & Sam’s Club
–pickup and delivery services
–bottled water delivery
–costs for backing up data
–office decorating expenses
–cable line if separate for your office

DUES, LICENSES AND FEES — IRS examples include:
–copyright fees
–union dues
–social security, medicare and unemployment taxes
–professional license fees
–fees for professional organizations

About the Author

Ed Pearlman
Ed Pearlman has focused on performing, teaching, and judging fiddle music for over 30 years, offering performances and workshops throughout the USA and in Canada and Scotland. His original training was with members of the Chicago and Boston Symphonies, and he played with orchestras and chamber groups at Yale and in Boston. He currently teaches privately in Maine and at workshops around the countr... [Read more]

34 Comments

  1. Ed Pearlman

    I should have mentioned that if you claim mileage deductions or a home office there are special forms involved, which is why I like tax software because it handles that correctly for us.

    Also, I didn’t mention some of the more self-explanatory expenses, but here they are in case it’s helpful:

    Schedule C deductions–
    Line 11 for contract labor (if you get the full pay for a gig and then pay other musicians); line 15 for instrument insurance; line 17 for legal & professional services (accountant, piano tuner); line 20a for renting a car; line 20b for studio rent; line 21 for repairs/maintenance (fixing instrument, rehairing bow, etc.); line 24a for travel (airfare, bus, lodging); miscellaneous expenses could include continuing education programs.

  2. Ed Pearlman

    One more thing! The IRS says it’s fine to deduct dues & subscriptions but there’s isn’t actually a line for it, so as far as I know, it has to go into miscellanous (“other expenses”, line 27).

  3. natalie

    don’t forget to log your miles….the Mileage Logger is a device that automatically logs your miles through GPS networks and allows you to log onto a secure website and sort your trips according to business, charity, medical, etc. This allows you to accurately file with the IRS and lets you stop worrying about writing down odometer readings.

  4. Shazia

    The gallery is really great!

  5. Arthur

    A couple of questions I have:

    1) What is the ‘Prinicipal Business’ code that I should use for 1040 schedule C, Box B? I’m a private music instructor as well as a musician. Should I use code 611000 (Educational Service) or 711510 (independent artist)?

    2) Am I able to combine my expenses that I have as a music instructor along with expenses as a musician? The only reason why I ask is that I make money as an instructor, but barely any as a performer.

    thanks!

  6. Ed Pearlman

    @Arthur: I’ll tell you what I do, and then I guess I should put in the disclaimer that I’m not an accountant etc etc. I use 711510 because I do both teaching and performing. And in my opinion it makes sense to combine expenses as instructor and as performer, provided that you are including the income from both on the same schedule C.

  7. Arthur PL

    Dear Ed, I wanted to start teaching piano in my apartment, as a supplemental income in addition to my part-time office job, and have purchased a very expensive piano for that purpose, in November of 2008. Since it was the end of the year, I taught only 2 lessons in December, for $80. Can I claim this piano purchase on my 2008 taxes? I don’t know if this matters, but I will be filing joint taxes because I got married last year, and we also had a baby so I will be claiming my baby as a dependent. What is it that I need to file? Can I even file C schedule for myself if I am filing joint taxes, and if I made such little income? Also, this piano is not going to depreciate in the next 5 years (I got some answers that I should depreciate over next 5 years), its value will only go up. Could I deduct all $15K, or only what I am sending monthly for the piano loan (which is $200 per month). THANKS!

  8. Arthur PL

    Also, I should tell you that I am a professional pianist and a piano teacher, with a part-time office job.

  9. Ed Pearlman

    @Arthur: I can make a few comments to help, but the tax laws change every year, so unless you just have W-2 wages and an easy return, it’s pretty important to check with an accountant or a tax preparer like HRBlock, or to use a tax software like Turbotax Home & Business that can take you through the steps and answer questions. You’re still responsible for doing it right, the moment you sign the return. Tax preparers and even software will take some responsibility if they make a mistake. Anyway, you can’t deduct the full price of the piano if a loan covered it, and you’d have to find out if you can deduct the loan payments. The problem here is that when you buy a piano it’s an asset, not an expense, meaning that you parted with the cash but the $15K is still yours except it’s in the form of a piano (of course if it’s paid by loan, it’s not quite yours). That’s why people talk about depreciation, because it is what you do with assets, and it’s a little tricky and doesn’t always have to do with market value. There are some rules about letting small businesses deduct investments like that as one-time expenses so an expert can help you with that. But usually people do that when it helps their taxes–if it just means a big loss for you, it might not help too much. In fact, there are rules about losses–at some point the IRS will not honor your Schedule C as a business if it loses money too many years (twice? three times? not sure where they’re at now)–they regard it as a hobby you spend money on. Yes it’s normal to do a Schedule C for each business you have if they have different names or purposes (performer/teacher can fit in one, I think) in addition to the normal From 1040 joint taxes form. Hope this helps a bit. Good luck!

  10. Elizabeth

    I travel a lot performing, and now am bringing along my infant to the gigs. Can I deduct his travel expenses on Schedule C (mostly plane tickets)? What about child care costs on the road?

  11. Ed Pearlman

    @Elizabeth — again, I can’t be the final expert here but generally if you can show that expenses are necessary to your work then you should be able to deduct them, but there are some rules about child care expenses. The IRS does answer questions like this over the phone and also has online publications you can search for information. I think the child care costs might require receipts from a registered child care provider – I’m not sure on this, but it’s the kind of thing you should look into now, so that when it comes time to do the taxes you have the right receipts to be able to take the deductions. The whole point of the deductions is to reduce your income by the amount it costs you to do business (if the costs are necessary).

  12. TM

    As a musical instructor, are you filing as an independent contractor?

  13. Ed Pearlman

    @TM: I personally file a schedule C as a self-employed person. Where the “independent contractor” question comes into play as an instructor is when I teach at a location that is advertised at a school. To be an independent contractor there, the school can’t have too much control over what you do, though it can have some policies. At one place I taught, people did pay the school and the school paid instructors, but lessons were arranged by the instructor and the instructor submitted timesheets to indicate what lessons were taught, so that they could be paid. These timesheets were considered invoices submitted by independent contractors for their work. There were no salaries. It can be a fine line, so it’s best to check with the school, an accountant, and/or the IRS help desk if you have questions. If you pay rent for a teaching studio and collect your students’ payments there’s no question you’re self-employed. Hope this helps.

  14. Nick

    Do you have to do anything to “become” an independent contractor? Are there any forms to fill out or anything of that nature?

    Thanks!

  15. Nick

    I am wondering the same thing as my last question but for self-employment.

  16. Veronika

    First of all, thank you SO much for this site! I just discovered it – and have learned a lot already.

    I have a question as well.
    I am a piano teacher, who travels to people houses. My husband and I are about to rent an apartment – and I want to teach from home. If we rent a one-bedroom (for two of us and potentially a child) – can I still claim that one of the rooms (living room) is my studio and deduct it in taxes? Or should I go for a two-bedroom. Will I be getting a bigger tax break with a two bedroom? My questions might sound like nonsense – I apologize, if they do.
    Thank you so much again.

  17. Veronika

    I want to try clarifying my question. Will it be difficult/not possible to claim our living room as my studio (since we will spend some time there for other purposes) or if it is a big living room I can use part of it as my studio? Or should I just get a second bedroom and use it as my studio?

  18. Ed Pearlman

    @Nick: An independent contractor or self-employed person, as far as taxes go, files a Schedule C (unless they are incorporated and not a sole proprietor, in which case check with your lawyer and accountant about taxes). You don’t file Schedule C for income that’s reported on W-2 forms from an employer, just on income of your own and income reported on 1099 forms. Different states have different rules about what constitutes an independent contractor, and so does the IRS – this has to do with how you are paid by a school you teach at or a project you do for someone and usually is more their headache than yours (e.g. they can be fined if they claim you as an independent contractor when the state thinks you should have been defined as an employee).

    @Veronika: I think the rules for office in the home have been changing. At one point you couldn’t claim business deductions unless your work space had a separate entrance and was not used for nonbusiness activities. Now I think the separate entrance is not necessary but you’ll need to check the latest rules about whether you can claim a space that has multiple uses. If you have a separate room for dedicated use as a teaching/practicing/gig making studio, I believe (but please double check!) that you can claim that percentage of your floor space, and that same percentage of your utilities as an office-in-the-home deduction. They are kind of particular about the rules, so that this deduction isn’t abused. If you’re deciding on where you live based on this, you should make sure you understand the latest rules and make sure the deductions are really worth the extra rent you might have to pay.

  19. sarah

    I was just wondering if you had any suggestions on which category the following expenses would be listed on the schedule C:

    Recital costs (accompanist, AV personnel, certificate of awards for students)

    Piano maintenance (piano moving, tuning)

    Great site, by the way… thanks in advance for your help!

  20. Ed Pearlman

    @Sarah: Here are my thoughts but always I have to make clear I’m not an accountant! You could deduct the accompanist, AV personnel, piano movers, and piano tuning under “Legal and Professional Fees” or possibly “Commissions and Fees”; the certificate of awards would be under “Supplies”. One website you could check for more ideas is http://biztaxlaw.about.com/od/taxdeductionsatoz/Business_Tax_Deductions_A_to_Z.htm

  21. Pete Dakoglou

    I’m an employee in the music field and also independent contractor. I have both W2 and 1099 misc. My question is, can I deduct my SE tax ? If I do that from my W2 withholdings, I can save plenty. If the answer is yes, from what line on 1040 or elsewhere.
    Also I heard there’s a 7.65% deduction to independent contractors, is that true? and what line ?
    Thanks for your cooperation

  22. Ed Pearlman

    @Pete: Once you figure out your self-employment tax on Schedule SE, you can deduct half of it on Form 1040, line 27. This affects your adjusted gross income, from which your tax is calculated, but you still have to enter and pay the full self-employment tax on line 56. As to the 7.65% deduction you’ve heard about, that’s just another way of saying the same thing about self-employment tax, because the self-employment tax is 15.3% of your net profit, and when you deduct half of it on line 27, you’re deducting 7.65% of your net profit.

  23. Byron

    I am a trumpet player and I recently ordered a new trumpet in 2009. I paid a deposit (50%) in 2009, and I paid the rest in 2010 when my horn was finished being built and shipped to me. So, my question is how do I claim the deposit on my schedule C? I have a receipt for it as well. Thanks!

  24. Ed Pearlman

    @Byron: the question about buying the trumpet has to do with whether it’s an expense or an investment. You would think it’s an expense and you could deduct the 2009 amount under Supplies in your schedule C tax form. But some say it’s an investment and you have to depreciate its value over time. There’s something called section 179 that could let you deduct it in the years you paid the money even though it’s an investment. It’s probably best to ask an accountant, call the IRS or let a program like TurboTax walk you through your situation.

  25. Connie

    Hi! this info is great. I just finished working on my taxes, but am unsure I did the mileage portion for my husband’s gigging correctly. Under Schedule C it asks if a car is used for the business- I put yes, and listed the mileage there (about 4,000 miles) and the software put about $2,000.00 as a deduction- that seems too high- was I to list mileage under a separate travel expense instead of saying the car is used for the business?
    Thanks for any help you can give!

  26. Ed Pearlman

    @Connie: If you’re using tax software, it should take you through the steps — usually you have to list mileage for the year, and then how much of it was for business, and then it will calculate your deduction. You need to have documented it throughout the year in order to claim the mileage. Since the IRS deduction for 2010 for business mileage is 50 cents per mile, because of the cost of gas and maintenance, you really would get a deduction of about $2000 if your business mileage was 4000 miles for the year.

  27. Chris

    Hi! Great site, lots of info here.
    This is my first time filing a tax return in the US and as a teacher so safe to say I’m a little confused. I teach piano at a school whereby every month I send in an invoice with the hours and the total amount to be payed. I received a 1099-MISC with the amount in box 7 under nonemployee compensation.

    1. What other forms do I need to fill out?
    2. Would I be considered self-employed or sole proprietor?

    Any help would be much appreciated
    Thank you!

  28. Len Wicks

    In an audit the irs agent wants to give us only 1/2 deduction for recital expenses which includes rental of a chapel, accompanist, flowers, and reception expenses. We put reception expenses under promotional events which is a full expense deduction, but she wants to give me only 1/2 and list it under entertainment expenses. Any thoughts?

  29. Ed Pearlman

    @Chris: sorry if this is too late for you for this filing, but for future reference, if you are self-employed you are basically the sole proprietor of yourself as the company. If there is some form somewhere that asks you to separate “self-employed” from “sole proprietor” write another comment and let us know! If you file as self-employed you will want to file Schedule C, and also the self-employed tax form. If you got a 1099 as you said, you didn’t have any taxes withheld so you’ll need to fill out a form for that. Again, it’s important to check with a professional or use good software like TurboTax, or study the tax code feverishly to understand it all; you can also call the IRS and they will help you with questions too.

    @Len: I would not want to get between you and an IRS agent auditing you! I have no idea if you have leeway for arguing with her on this. This is why some people use an accountant or an advocacy service such as TurboTax offers (others may also offer such service) so that you can have an experienced advocate who knows what battles to pick and which ones aren’t worth it. If the IRS agent views the reception after your recital as entertaining people, she’s telling you it belongs on line 24b of Schedule C, which is for “deductible meals and entertainment” and that’s a 50% deduction. As teachers, we may consider such expenses essential to the event, but it’s a bit of a gray area, because you could have a recital without a reception. Since I’m not familiar with your particular situation, it’s impossible for me to say which way it should be for you, but you could discuss the situation with the IRS agent and see what she thinks. I’m sure she would explain her rationale and listen to yours.

    In any case, it’s helpful to know that the IRS may consider a recital reception as an entertainment expense.

  30. Ellen

    For tracking & deducting mileage while traveling to students’ homes, do I deduct the “going to” portion (point A/current location -> student’s home) or “to and from” portion (point A -> student’s home -> point B)?

  31. Ed Pearlman

    @Ellen: To track mileage, yes, you should include the miles you used to get to students’ homes and back home again. (Not the miles you used to go grocery shopping, etc., though.) You should have a written log, preferably in a spiral notebook so it’s clear, if you ever have to show it, that all the entries were written as they happened. You put in the date, odometer readings at start and finish of trip, and the destination and reason. You can search the IRS site for the document that specifies what the IRS needs for documentation, just to be sure you’re doing it right.

    Logging and deducting mileage good for travel to student homes, to gigs, teaching-related errands, etc. But if you are actually an employee of a studio or school, you can’t deduct mileage getting to and from work–that’s considered commuting. If you’re an independent contractor and your primary place of business is home, you can deduct your traveling mileage to where you teach. It can seem a bit tricky at first, but if you read the IRS publication about this you get the picture of what they’re looking for.

  32. Xacto Staplers

    This is a great list. Although, some of these may be a little questionable I think. A GPS system?

  33. Jo

    Hi, I am a piano teacher and I was wondering if the $ that I will give to my students as a graduation present could be deducted in my yearly taxes? I have taught him for 12 years Thx

  34. Ed Pearlman

    @Xacto and Jo: No, I didn’t make that up about the GPS. If you have it for the purpose of finding gigs, I guess it’s deductible but you might want to investigate to be sure. Usually if you use something for dual purpose (business/personal) it’s hard to prove how much was business use and therefore hard to deduct. As to the $ gift to a student, I don’t personally see how that can qualify as a necessary business expense. A gift of a teaching aid, sheet music, relevant recording, graduation pin, certificate, etc, could be deductible, but it’s harder to justify a straight money gift. Still, it’s best to check with an accountant to talk over the specifics of your situation if you really think it could be considered a necessary expense.