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Just curious if anyone knows about reporting to the IRS for indie performing artists (cost of producing CDs, self-promotion, etc.) Schedule C looks like the right place but unsure of how to report it. Any resources out there.

Pops,

How did you resolve your TAX situation? I am sure others might be curious if you'd like to share?

Thanks,

Brian

Hey pops

well, I'll try to keep it simple, and go over my last year's tax return for you. I am a recording and performing and touring artist and it is my profession and business, though I also have a bit of outside income.
Each year has different things. This year I didn't fly or take a bus as I sometimes do, so nothing on line 24 a. And I made a major investment in recording equipment, which will be written off over 5 years.

I will also state that I am NOT a accountant (though I once ran a corporation) or a tax lawyer. It might be useful to some folks to let some one who does this sort of thing prepare your taxes one year then just keep doing the same with new numbers each year. Finally, tax law isn't that complicated really, if you just bull through all the instructions. I studied a lot of it at one time many years ago. The first time it is tough, after that, if you keep good records, it is fairly easy, because your recording practices are designed to give you the various totals that you need to enter into the forms.

So! The first thing is KEEP RECORDS.

make forms to suit your needs and print them out as needed (say monthly or weekly), or buy a tax record book at an office supply place and tear out what you don't need, or use forms from a database program.

I can't emphasise how much easier it makes the whole business if you keep records from the start and just have to total up at the end. Also, I think it really helps to have a clear, practical, and realistic view of where the money comes from and where it goes.
I use a spiral ring notebook and keep not only records that apply to taxes but records that don't, or more, that show me the information as I am interested in seeing it, rather than designed for paying taxes. So that at tax time I have to add up different totals from different pages and places, but I want to understand what is going on in ways the taxman doesn't care about. Like I want seperate accounts for each different CD I produce and sell, while to the taxman, its all one. I want seperate accounts of expenses for different tours, broken up not according to the tax year but according to the duration of that tour. Things like that.
But knowing and planning for what figures you'll want to have handy at tax time is important as well. But there are major differences, like producing CDs that I have to pay for as an up front expense (in my accounts), but as far as the tax man is concerned are only an expense on a per unit basis, offsetting the income as they are sold per unit, even if it takes 3 years.
I have to break even to eat and keep travelling in the real world, but tax accounts don't function that way.

enough said: details:
(numbers indicate line numbers on tax form)
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I filed a 1040

schedule C: profit or loss from business
1.Income:
from performances and Cds
4.minus cost of goods sold(CDs), which means all costs of recording and producing the CD divided into the print run for a cost/CD, only the cost of the CDs sold may be deleted from income.

Expenses:
8.advertising (website and bizcards)
10.Car and truck (I use actual expenses rather than a mailage rate, I want my records to show the realities, though include milage and my cost/mile in my accounts as well)
13.Depreciation: attatch form 4562(This is my recording equipment, which I am amortizing over a 5 year straight line basis)
18.office expenses (minor office supplies and postage)
22. supplies (recording media-tape & CDRs)
23. taxes (withheld taxes, except fed income taxes)
24.b. meals (food on the road, which is fully deductable for entertainers, one group still allowed to fully deduct travel expenses when the tax code was overhauled)

this year, due to the investment in equipment and a slow year, I took a loss of $600.

I also attached
Schedule SE : self employment tax
none owed. This is the most likely tax I might owe if I made enough any year, it hits if I make over $400 profit.


Normally I make a very slight profit, and often break even by holding off some expenses to the last minute to see if I have a profit since I don't want to take a loss, and don't want to trigger self employment tax either, so I want to show between $1-$400 profit. The fact is, I do just barely break even each year, but manage to do it and keep going. For many years I have not had to file because there wasn't enough income, though I kept records and filled out the forms and filed them. This year I worked for a school district who had to pay me as an employee and withhold taxes, so I filed to get back the withheld income tax.

I am not trying to scam my way through anything or avoid taxes. I used to joke that I had found the answer to high taxes: poverty. My acual income in usually around $5,000 a year. I am just not dedicated to making a lot of money and I play for free a lot, mostly at places that deserve it, like schools and old folks homes and centers, small no budget festivals etc. Most of my earnings come from tips, since venues don't often pay. I guess I feel like if America wants its artists to live in poverty, that is their problem and their fault. I don't have time to worry about it, or complain that venues don't pay or don't pay near what it costs to perform. I am here to serve the people and I do, no matter what it costs me. I feel satisfied that I manage to keep going year after year, just focused on the music. I just focus on the music, not what I have to eat, or wear, or drive, or live in. And maybe I even feel like, well, I can survive, I have survived, and don't really care if I never live in a house, other people aren't so tough or dedicated maybe, or have families to support or girlfriends to entertain, whatever, I'll play the gigs they can't afford to. I have no illusions that "exposure" will get me anywhere, I know that is a hoax. I just smile, its sort of funny.

If for some reason I actually made enough money one year, I'd pay taxes, but it hasn't happened in a long time. Usually if there is any profit showing, there are more than enough expenses I have been putting off to soak it up at the last minute. I could probably make more money if I had a reason to, but the things I want money can't buy, and I've never had a home or family or girlfriends to support. If I did, I could and would. But now, if I am making enough money, I stop worrying about playing making it and go back to the free gigs that serve the people who can't afford to pay for live music and perhaps could be said to need it more. Sometimes I just go out into the wildlands and camp out for weeks, trying to get the heart and soul and energy together to do it again. I can and have lived on $50/month that way. For me, a hundred a week goes a long way. Especially if i go weeks without spending much of anything, out in the wildlands. I am also indebted to the many people who appreciate my music enough to give me shelter along the way. I also know how to live off the land, in many ways.

If it comes down to it, I am playing music, and thats all that counts, and I really ignor the rest. And most often, for me, the barriers our society/economy/culture has erected, or allowed to be erected, to making money for it aren't worth my time to assail. I can find plenty of places to play, and get by, independently. I really feel like its not my business to worry about making money, but to play and do my best, and its no reflection on mr wether I make money or not, but a reflection of American culture. The people love my music, I draw crowds on the street. What else matters? I can't take it with me.

But I was supposed to explain how to file taxes, which I did, not explain my odd philosophical and economic viewpoints.

peace
Brian


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Brian
Folksinger
PAN,CMC,IUMA,JPF,52TV
http://www.pan.com/folksinger

Opps, forgot to do a factual conclusion

I fill out complete forms for my own records as well, with attached sheets showing how I calculated all the amounts and generally what they came from in relation to my own records. This goes in with the file of all the reciepts which are numbered and all the accounts for that year. I actually refer to the accounts to estimate future costs accurately, wether for a road trip or CD production. But I often distill that information into a couple pages to keep in reference. In fact, since I get queries, I keep things like CD production costs in a file I send to people who ask that question.

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Brian
Folksinger
PAN,CMC,IUMA,JPF,52TV
http://www.pan.com/folksinger

But I loved reading it all!




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Later,

Pat