Tax Tips for Music Creators

January 28, 2019

Gather your receipts and fire up Quickbooks - it’s tax season! This time of year can be tense for songwriters and composers, with all those different income streams (including your ASCAP royalties) to keep track of. Whether you’re getting a refund from Uncle Sam or you’re helping him buy a new top hat this year, you’ve got some unique filing opportunities that you might not know about. We asked a couple of tax experts for tips for music creators.

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“If you use part of your home for business, such as an office or recording studio, you may be able to deduct a percentage of the expenses related to your home. For example, you could deduct part of your rent or mortgage interest, real estate taxes, insurance, even utilities and homeowner’s association dues. The catch is that the home office must be used regularly and exclusively for business; this means you generally can’t have another office outside your home for the same business, and you can’t use the space for personal activities."
        -Trey Dunaway, Vice President, Flood, Bumstead, McCready, and McCarthy, Inc.

“Here are some tips on how to properly record your travel expenses for tax deductions. This does not need to be complicated, and only requires good record keeping.

Keep a small journal in your car to record mileage. Whether you are driving to a gig or picking up guitar strings, you can deduct either a portion of the driving expense, or a standard rate: 54.5¢ per mile driven for business, 18¢ per mile driven for medical or moving or 14¢ per mile driven for charitable organizations. In the journal you will need to include the date, beginning and ending odometer, starting and ending location and purpose of travel. This will also give you an idea what percentage you use your car for business, which could offer additional tax deductions of the interest on an auto loan and registration.

Travel with an envelope to collect receipts for flights to gigs, train fare to auditions, tolls on the interstate and taxi fare to meetings, as well as parking and valet fees, as these are also deductible. Remember to write the purpose for the expense on the back of the receipt. Lastly, if you can prove you ended up spending more time working than relaxing during that much needed vacation, you may also deduct the plane ticket and hotel stay.”
        -Isis Moulden, accountant

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The IRS deadline for filing your 2018 federal tax return is April 15th, 2019. Deadlines for your state tax return vary from state to state. Find out more at www.irs.gov.