#MusiciansandFinance is musicovation’s blog series exploring finance for musicians. All posts are contributed by graduate students in New England Conservatory’s Entrepreneurial Music course Finance 101: What Musicians Need to Know taught by NEC alum Jessi Rosinski.
by Nate Stoerzinger
Musicians taking gigs have the downfall of having to pay self employment income tax. This basically entails paying twice as much on taxes when compared to people with salary jobs. The offset to this pain is that we get to deduct expenses for our business from our income. These deductions typically end up equalizing, or possibly leaning in our favor, our taxes numbers.
I believe one of the most important things to remember in finance for musicians is that self employment can be your friends with deductions. The catch behind this is that you need to keep track of your deductions throughout the year, because you’re bound to forget something over the course of a year. Being a trumpet player and having a recording business, the deductions that I wrack up each year is astounding. Some of my personal examples of deductions are:
- Electronics/Technology: laptop, software (Finale & Vegas,) recording equipment (microphones, lighting, and cameras,) Dropbox Pro, midi keyboard, phone, phone and internet bill
- Instruments: horns, mouthpieces, mutes, sheet music, valve oil and slide grease, instrument repairs
- Transportation: monthly T pass, miles driven, insurance, bike, vehicle repairs, plane flights, Uber, Zipcar
- Health: massages, acupuncture, gym membership, dental work (molds and check ups)
- Personal Development: attending seminars and intensives, competition fees, audition fees, conferences, any meetings with clients where food or beverage is bought, lesson space
These are just a few things that I have come across this year that I can deduct from my gross income. Another amazing aspect of it is that you can extend deductions over multiple years, so you can reap benefits at a more equal value. You can take only a percentage of some like: phone and internet bill, car repairs and mileage since use also use this things personally as well that doesn’t apply to your work.
Some of the deductions that I have are more risky ones to take (dental check ups) and if you do list these on your deductions, you have to be prepared to possibly defend yourself in the case of an audit. If you can hold your ground and fight for you case, then it’s worth deducting.
These deductions can reduce your taxed income by sometimes verging on 30 percent, depending on expenses for the year. This offset makes such a difference on taxes and can save you mounds of money each year.