Tax Tips for Musicians: 10 Secrets You Should've Known Sooner

Written by Ramsey Brown.

Taxes are notoriously tricky — especially when you are self-employed as a full time musician. If you have made a professional career out of music, it should be viewed as your business that you are the boss of. 

When you are a working musician or own your own business, there are a ton of expenses that come out of your own pocket. But the great thing is, you are entitled to deduct these expenses to reduce your tax liability. 

Tax season is right around the corner and although most Americans dread this time of year, music artists have the opportunity to use the system to their advantage. 

Music presents unique problems in an income tax audit. While people with ‘regular’ jobs have federal and state taxes withheld from their paychecks, most musicians don’t. This means musicians have to pay a larger sum of taxes on the backend from any income made from live performances, royalties, merchandise, etc.  

But to offset this, musicians have a lengthy list of write-offs that the IRS deems as deductible expenses. Which means, artists can get a significant amount of money back in their pockets each year. 

If you are a musician, producer, songwriter, band member, owner of a recording studio or record label, you could be saving hundreds, if not thousands of dollars in taxes — if you know how to do them correctly, that is.  

There are many expenses you encounter as a musician that can be written off for tax deduction later down the road. Expenses related to performances, auditions, recording, and co-writing sessions all fall under this umbrella. 

This also includes mileage and lodging while you are traveling to and from business related events. Business travel is 100% deductible for tax purposes.

Did you know that grabbing food or drinks over a business discussion can be deducted from your taxes? Any time you take out other musicians, agents, venue owners, promoters, producers, lawyers, etc. for a meal to talk about music or business, you can get money back come tax season.

Although the IRS won’t cover every tab you cover in full, they will give you a 50% deduction for any meals taking place over a business discussion. Just make sure you keep your receipts and note what exactly the breakfast, lunch, or dinner meeting was for!

Not only must artists keep well track of their business receipts and payment records, but they also need to keep note of the reason for them. For every expense you need to provide who, what, where, when and why in a business-like format.

Your dinner receipts or mileage records will not be enough to prove to the IRS that they were business related. You’ll have to note what the dinner was for, the discussions that took place, who the dinner was with, and any additional detail that can confirm it was related to your music business. 

The more information you can provide to the IRS, the more refund you are likely going to receive. Keeping up with so much information can be a headache, but well worth it when you get a huge check back from the IRS.

There are a lot of grey areas when it comes to what musicians can and cannot write off on their taxes. This is because an artist’s business and personal expenses often tend to intertwine, and it becomes tricky trying to prove to the IRS what was used for business and what wasn’t.

For example, if your home office or studio is your primary place of business, the travel to and from home is not a business commute and therefore that mileage is not deductible. The best way to know what can and cannot be deemed as a business expense is to contact your accountant or tax professional. 

Make a list of everything that you are able to write-off or deduct. This way, it’s easier to remember what you should or shouldn’t be keeping track of.

Because musicians don’t typically have taxes withheld from their paychecks, they are required to pay a bigger lump sum of taxes at the end of the year. One very common mistake that artists and other 1099 employees make is failing to set aside money in order to make their payment.

A good rule of thumb and habit all musicians should make is setting aside a percentage of their income earned every quarter to pay the IRS. The standard is 30% of your gross to account for both federal and state taxes, but could be more or less depending on the state you live in. 

Generally, it’s better to pay more taxes throughout the year than to get stuck with a large tax bill at the end of the year. Especially if the time comes around and you don’t have enough money to pay back the IRS. Which could then lead to more trouble like penalties, fines, or late fees.

© 2023 Omari MC, LLC.  All Rights Reserved.

© 2023 Omari MC, LLC.  All Rights Reserved.