Alyson Miller is a CPA who provides specialized accounting and tax services to music and entertainment clients.  She is the founder of Alyson Miller, CPA PLLC a rock and roll accounting, tax, and business management firm. She has years of music business experience working for both independent and internationally recognized artist and songwriters, record labels, publishing companies and music distributors.  

Musicians can save themselves some money and reduce their tax bill if they know what to look for when it comes to filing taxes.   There are many deductions that are specific to being a self-employed musician. 

If you are self-employed (i.e., you don’t receive a W-2 from an employer) you will file your income and allowable expenses on a Schedule C as an attachment to your 1040.  The net of the Schedule C is then reported on page 1 or you 1040. 

Always keep receipts for everything along with other documentation that you may have such as tour schedules. Here is a list and brief description of the typical allowable expenses.

Travel Expenses

The location has to be far enough away that is it inconvenient to return home otherwise expenses are considered commuting expenses and they are not deductible. 

Allowable expenses include:

• Hotels
• Airfare
• Phone calls to home
• Rehearsal space rental
• Tips
• Local transportation like taxis at your destination

Meals

• Meals associated with overnight travel
• Meal expenses incurred while discussing or conducting business

You are only allowed a deduction for 50% of the meal costs and the IRS requires a receipt and documentation on who, what, where, and why you incurred the meal expense.

Equipment

• All equipment (guitars, amp, strings, etc.)
• Repairs and maintenance on equipment

Any item that generally costs more than $500 is depreciated over 5 years.  What this means is that you can take one-fifth of the costs as an expense each year for 5 years.  You may be able to take a 179 deduction which means you can take the entire cost as an expense in the year you purchase the item.

Vehicle Expenses

There are two methods allowed for vehicle expenses.  You can choose one or calculate both and choose the one that gives you the biggest deduction.

Method 1 – keep actual receipts for:

• Gas
• Repairs & maintenance
• Insurance
• Property Tax

The IRS also allows a depreciation deduction for your vehicle under this method.

Method 2

• Keep mileage log of every mile traveled

• Use standard mileage deduction for each mile traveled (55 cents for 2009; 50 cents for 2010)

If you have a room in your home used exclusively for your business such as a studio you may be able to deduct it.  You can take a percentage of the square footage and apply it to:

• Rent
• Mortgage Interest
• Utilities
• Property Taxes

Health Insurance

• Premiums that you pay as a self employed musician are fully deductible on the front page of the 1040.

Other Items

• CD’s and music downloads
• Concert tickets
• Music publications
• Wardrobe

Don’t get greedy with these items!  Wardrobe must be used exclusively on stage.

Always consult your tax professional about your individual situation.  One size does not fit all so finding a music business accountant is always preferable. 

Alyson Miller is a CPA who provides specialized accounting and tax services to music and entertainment clients.  She is the founder of Alyson Miller, CPA PLLC a rock and roll accounting, tax, and business management firm. She has years of music business experience working for both independent and internationally recognized artist and songwriters, record labels, publishing companies and music distributors.  

As an indie artist you have no job security, no constant paycheck and no retirement plan.  You might not be able to do much about the first two but you can definitely do something about the last, the retirement plan.  As a self employed musician you can invest in your future and save on your tax bill all at the same time.

One of the best options for the self employed is the SEP-IRA (simplified employee pension-individual retirement plan).  Most likely you will be filing a Schedule C along with your 1040.  If that’s the case, you can put in as little as you like, up to 20% of your net Schedule C (maximum of $49,000 for 2009).  An advantage to the plan is that you can decide each year whether or not to contribute unlike other plans that require you to make contributions each year.

Another advantage to a SEP Plan is that they are easy to setup and administer.  It can be as easy as making a phone call to your local banker.  The costs for setting up and maintaining the plan are quite low in comparison to other plans. 

The contribution you make can really save you on your taxes too.  The amount contributed gets subtracted from your gross income as long as the contribution is made before the tax deadline (April 15^th or October 15^th if you file an extension). 

Lastly, always contact your tax advisor about making a contribution to any retirement plan. It’s always best to let them do the contribution calculation but consider the SEP as an option no matter how much or little money you make.  Even the smallest amounts saved or contributed can really make a big difference to your retirement future. 

Alyson Miller is a CPA who provides specialized accounting and tax services to music and entertainment clients. She is the founder of Alyson Miller, CPA PLLC a rock and roll accounting, tax, and business management firm. She has years of music business experience working for both independent and internationally recognized artist and songwriters, record labels, publishing companies and music distributors.

If you’re in charge of a band and you hire musicians you need to be aware of the tax filing requirements for Form 1099-MISC. The filing deadline for the form is quickly approaching and there can be penalties if you don’t file.

The forms must be postmarked by January 31^st. Copies of the forms and a transmittal (Form 1096) must be mailed to the IRS by February 28^th.

So what is a 1099-MISC?

Form 1099-MISC is a form required by the IRS to report payments to independent contractors, such as band members that are not paid through payroll. A form must be prepared for anyone that you paid at least $600 or more in a calendar year. If the payment was made to someone who is not self-employed you do not need to prepare a form for them.

How do you prepare the form and what information is required?

Generally payments for services to band members, commissions to your manager or any other independent contractors are entered in Box 7 on the form. If you paid rent to anyone such as space rent or equipment rent the amount paid goes in Box 1. If you paid your attorney these payments would go in Box 7.

If your band is organized as a partnership or corporation a Form 1099-MISC is not required for payments made to band members. These payments are reported on a Form K-1.

You will also need the name, address, and social security number for each form. One good practice is to have everyone you pay fill out a W-9 form. The W-9 will provide you with all of the information that need for the 1099-MISC. So, before handing someone a check you should hand them a W-9 first. Have them fill it out and keep it on file.

If you don’t have the information on file it’s your responsibility to gather it. This can be a difficult task if for example your drummer quit in the middle of the year and you’re no longer in contact with him.

Where can you get a W-9?

It’s a simple form that you can get in pdf format at www.irs.gov/pub/irs-pdf/fw9.pdf. The information on this form can protect you in many ways and it saves you the hassle of tracking down the information after someone is long gone.

You’ve received some 1099’s so what do you do with them?

Venues that paid you $600 or more should send you a 1099-MISC. The 1099’s have been reported to the IRS so make sure that the information on the form is correct, especially the amount and social security number. If any of this information is incorrect contact the payer and have them reissue it. Be sure to report all income that you receive even if you don’t get a 1099.

Keep the forms that you receive to document the amounts reported on your return. They do not need to be filed with your return.

If you find the task of preparing the 1099-MISC difficult your tax preparer can complete these forms for you. Always contact your tax advisor with specific questions or advise.

Rick Goetz is a Musician Coach and Music Consultant by way of a fifteen
year career as a Major label A&R executive at Atlantic and Elektra Records a
musician and a music supervisor. Throughout his career he has played bass
for members of the Cult and Sharon Jones & the Dap Kings and on the industry side has worked with artists like Kid Rock, Matchbox 20, Sugar Ray and Damage Plan. His current client list ranges from Grammy award winners to people just looking to get their foot in the door. You can check out Rick at www.MusicianCoaching.com or twitter.com/musiccoaching.

I was once told a story about Bill Murray and Hunter S. Thompson.  I can’t verify the specifics of the story but I suppose for the purposes of this article it doesn’t much matter.  During the production of the 1980 Film “Where the Buffalo Roam”, in which Murray was to play a young Hunter Thompson, he met Hunter poolside so he could get a good idea of what the famously eccentric writer was really like.  In response to the question “What is it like to be you?” Thompson tied Murray up to a deckchair and threw him in the pool.

Such is the position of most artists in the music business – floundering in the water and trying their damndest not to drown in spite of overwhelming circumstances.

I run a music business consultancy called Musician Coaching which was something I put together after having been a musician on and off for twenty years and having done A&R at Major labels for almost a decade.  As a result of actively promoting this business I get contacted by several strangers every day who are looking to make it in the music industry.  It never ceases to amaze me that in this day and age with all of the tools now available to artists that people are still looking for that one person, that one opportunity or a chance encounter that is going to propel them to superstardom.  That’s not to say that I mind being contacted – far from it!  It’s just that the type of questions I get can be really disturbing.  “Can you get me a record deal?” or  “Hey – I just need a manager and I’m going to make millions!  You need to introduce me to great managers.” 

Really?  Last I checked it was 2010.

Chances are if you are reading this – it doesn’t apply to you but from what I have seen this is still the prevailing mindset of many aspiring artists.  I believe those with this mindset won’t make it – period.

In my opinion if you are going to make a living making music - let alone “making it”- you have to own the following:

·         There is no help coming for you

·         The age of the “big break” is all but over.

·         The one person who will help your career more than anyone is you.

Harsh? Yes.  Hopeless?  Not at all.

Let this empower you.  You no longer need to spend a great deal of time chasing management, booking agents or labels.   I am not suggesting that any of these types of strategic partners aren’t helpful but I do find that many artists seek to engage partners far too early in the trajectory of their careers.  Before you seek out someone to partner with you ask yourself the following questions:

·         Have you played out locally on a regular basis for at least six months? 

·         Do you have a corporate entity and an intra-band agreement?

·          Have you trademarked your name?

·         Are you registered with a Performance Royalties Organization? (ASCAP, BMI, SEASAC)

·         Do you have a professional looking website for your project and a presence on social networks?

·         Have you made “no apology” recordings of your songs that you think are representative of your ability?

·         Do you have a bio on your musical career that doesn’t peak when you were eight years old and taking piano lessons?

·         Do you maintain an ongoing online and offline positive relationship with a large group of people you could call fans without feeling funny about it or including your parents and extended family?

If you answered no then your business is not yet off the ground.  You don’t yet have a viable and fully formed product.  In any business it is very difficult to get an investment for a blueprint concept or an idea.  Getting funding for a start up business becomes much easier the more time and effort (and money) the entrepreneur puts into it.  You have to remember that seeking out management, agents or labels is asking someone to invest in you.  It might not be financial investment but the amount of time a partner like this would need to devote to developing an artist’s career is usually a full time job.  What do you bring to the table other than your talent?

It’s true – people who interact with artists a great deal are often jaded (Yes, me too.  Couldn’t you tell?)  The failure rate in music and the arts in general is astounding.  If you really want to get the attention of competent and experienced handlers you have to be the one to get your career moving on your own.  If you make enough noise long enough people will find you.  Overnight successes that are examined closely are very rarely (as in go by lotto tickets instead) a case of someone being struck by the thunderbolt of fame whilst daydreaming and smoking dope in the parent’s basement.

What’s the good news?  There are now plenty of sites that provide information and insight and dozens of tools to help you get your music heard for low or no cost.  This makes it harder to rise above all of the noise (because everyone with a mic can be a singer in this day and age) but it is still a viable way to start.

Go find other artists and build a community.  Relationships with your peers when starting out are usually more valuable than industry relationships.  If you are able to surround yourself with several developing artists who are in your situation and perhaps even endear yourself to people who have put in a bit more legwork than you this will help a great deal.  Being able to market yourself to the fans of similar acts is almost the whole name of the game in the beginning so along those lines – go make friends!

Long story short (too late?) – before you spend time and effort chasing big league help, make sure you have maxed out your ability to do everything within your reach to convert strangers to friends, friends to fans and fans to fans who will actually purchase your products.  If you do that long enough and well enough even in a small town – industry will find you.

Good luck out there,

Rick

John P. Strohm is a transactional entertainment and intellectual property attorney with the firm Johnston Barton Proctor & Rose LLP . John’s practice focuses on the representation of musicians, songwriters and independent record labels. Prior to becoming an attorney, John was a professional musician and producer for over a decade. He performed and recorded as a member of several notable alternative pop/rock acts, including The Lemonheads and Blake Babies.

The first recording agreement I had the pleasure of signing as a recording artist was a typical, label-friendly, multi-option contract. The anemic royalty, based on the “suggested retail price,” was further depleted by container deductions, deductions for so-called “free goods,” and paid on only 90% of net sales to account for records damaged in shipping (as they often were in the dark ages of shellac discs).  In essence, it was a scam, though a scam that had evolved and had become accepted as industry standard.  I had no idea how lousy the financial terms were for my band at the time. When I finally learned enough about the business to understand the deal terms, I felt duped and angry at our attorney for failing to adequately explain the contract to my band.

I felt much better about the terms of my next deal: a handshake agreement with a startup indie to split all profits from any releases 50/50. We didn’t address territory, ownership of the masters, mechanical royalties, what constitutes the label’s “costs,” or even exclusivity between artist and label. Not surprisingly, we eventually had to fill in some of these terms under somewhat less amicable circumstances.

Now that I spend most of my time representing artists and labels in recording agreement negotiations, I have realized that my experience reflects the two basic types of recording agreements in the late 1980s/1990s industry. On the one hand, majors and some independents insisted upon very formal, generally label-friendly and traditionally-structured deals, and on the other hand certain independent labels offered rather informal net profit split agreements, which were often verbal agreements striving to provide the antithesis of what was widely regarded in the indie community as the outmoded major label-style deal. Both of these models have flaws, and both basic structures exist today, albeit often in slightly more evolved forms.

The challenge that enlightened indie labels, career-minded artists, and counsel for both face today is how to structure and draft a workable written agreement that retains the independent spirit and intrinsic “fairness” of the aforementioned handshake deal. This article is the first of several I will write about net profit split recording agreements; future articles will focus on certain specific issues that are briefly addressed in this introductory piece. Below I will summarize certain key terms that should be considered and addressed in any such agreement.

Ownership of Master Sound Recordings

The question of ownership of the master sound recordings is a key term in any recording agreement. The trend today with independent labels is toward record companies licensing the exclusive rights in master recordings from artists instead of owning the copyrights in the underlying masters. Nevertheless, often a first draft of the contract – even in net profit split deals – is structured so that the label owns the masters. Thus, retaining ownership becomes a key negotiation point. Typical license terms for master recordings range from five to thirty-five years.

Significantly, under United States law any transfer of ownership of sound recordings must be in writing and signed by the transferor to be effective. Thus, any verbal agreement that purports to transfer ownership of masters is void. Furthermore, any license agreement with respect to sound recordings must be in writing or is terminable at will by either party. In a recent federal case, the Butthole Surfers won on appeal in a suit against Touch and Go Records to terminate a verbal license agreement with respect to numerous valuable albums recorded by the band. As such, it is enormously important for any label to insist upon a signed contract for any recording agreement.

Controlled Compositions Clause

In recording agreements, songs that are written in whole or in part by the artist are called “controlled compositions.” Traditionally, labels pay the writers of controlled compositions a royalty – referred to as a “mechanical royalty” in exchange for the writer granting a license to the label to sell recordings of the composition.

The typical approach under net profit split recording agreements to the controlled composition clause is that the artist waives mechanical royalty payments with an acknowledgment that mechanicals are a part of the artist’s share of the net profits. This becomes problematic for the artist/writer because publishers often rely on mechanicals as a guaranteed revenue stream. Without a mechanical royalty stream, the writer/artist is less marketable to publishers. It is often favorable to the artist to establish a separate, recoupable mechanical royalty stream to address this problem.

Definitions of “costs” and “advances”

In net profit split agreements, the difference between “costs” and “advances” can be unclear and confusing. Generally, costs are broadly defined to include all expenses of the label with respect to a project except general overhead. Sometimes, however, labels pass through general overhead expenses to artists on a pro-rata basis.  Costs are recouped “off the top” from the first sale. It’s important to note that the definition of recoupable costs under a net profit agreement can be far broader than a traditional royalty model. As such, the “fairness” of the net profit split can prove somewhat illusory.

In contrast, advances are generally understood to be monies that have been advanced to the artist, which the label recoups solely from the artist’s share of royalties once the label has recouped all costs. It is in the artist’s interest to have as many expenses as possible treated as costs that are shared by artist and label.

Non-Traditional Revenue Streams

The newest model for recording agreements, the so-called 360 deal or all-in deal, can pose problems for artists. It’s no secret in the music industry that it is becoming increasingly difficult for labels to sell sound recordings.  As such, labels may justify commissioning non-traditional revenue streams in their recording agreements, such as touring, publishing and merchandise by citing the generosity of a 50/50 net profit split. Whether or not these emerging deal structures make sense in any particular situation requires a factual analysis.  Depending on the strength of the label, existing fan base of the artist, and other issues, an all-in deal may benefit the artist. Nevertheless, there are many situations in which the all-in deal primarily benefits the label.

Conclusion

As the mainstream music industry struggles to find a new paradigm in the digital age, the indie business is quickly evolving – often to the artist’s advantage.  In the coming months, I will provide more in-depth analysis regarding the points mentioned above and others in future blogs. Please keep in mind, however, that any agreement transferring or licensing copyrights in sound recordings should be in writing, prepared by an attorney with music industry experience, reviewed by competent counsel, and signed by all parties. While I very much appreciate the spirit and intentions with which net profit deals are generally approached, it is crucial to carefully consider and review (and execute a writing with respect to) the material terms of these contracts.

I’m a firm believer that the longer an artist can manage themselves the better off they will be in the long run. I wrote a blog post last year titled “Build It and The Music Biz Will Come ” I encourage artists to read before rushing out to find a music management “team” early in their career. Once an artist has done all the hard work required to build a dedicated fan base they may want to consider hiring management to help grow and manage their business. Below is an overview of some of the traditional management roles in the music business.

Manager

Traditionally, managers have spent much of their time getting their clients signed to a record label deal then working with their client’s record labels to coordinate publicity, radio promotions and retail marketing budgets and programs. Today, the desirable skills for a manager in the music industry have changed fairly significantly. Managers need to be specialist in direct to fan relationships, social media, online marketing, licensing and sponsorships. They should be generally knowledgeable in ways artists can be successful with and without a record label.

Managers should handle all the artist’s personnel issues with the band and crew members and work with the rest of their management team including the attorney, booking agent, business manager and tour manager as needed.

Managers are typically paid 15% to 20% of the artist’s gross earnings. That means they get paid their percentage on all the artist’s earnings including, royalties, publishing, touring, merchandise, or sponsorships before the artist gets paid. Some managers have multi-year contracts (that can be quite complicated) with the artists they represent and some just work on a handshake.

Attorney

Given the uniqueness and complexities of recording contracts, management agreements, publishing deals, sponsorship or licensing agreements and the various other music business related agreements attorneys can play a critical role in protecting the interests of the artists they represent. The most important thing to look for in an attorney is experience in the music business. Just because someone has a law degree (even from a top school) does not qualify them to adequately represent artists in the music business.

A good attorney with experience in the music business can keep you from making contractual mistakes they have seen that have happen to other artists. Attorneys usually charge by the hour or by retainer (a set monthly fee) and in the music business it’s fairly common for them to charge well established artists a percentage of gross earnings, 5% is typical. 

Business Manager

A business manager is the person or firm that collects monies owned to the artist from royalties, publishing, touring and merchandise sales, pays the bills, band and crew, invests the profits and files the tax returns. They handle the artist’s general accounting related needs, royalty collection & auditing and tour budgeting & reporting. Many good business managers are either CPA’s or employ CPA’s on their staff due to the complexities of the music business accounting and the challenges of dealing with multiple state and international tax jurisdictions that come into play when an artist is on tour. They also handle all financial aspects of the artist’s personal life including insurance, loans, mortgages, investments and estate planning.

Business managers typically charge 5% of the artists gross earnings in the music business but some an hourly rate or flat monthly fee. 

Booking Agent

Booking Agents play an important role in the success of the artists they represent by planning and booking their tours with promoters and venues. They will make sure you are playing in venues that are known for your genre of music or booked as an opening act for bigger band. Booking agents negotiate the fee structure (guarantee,  % of the door, meals, etc.), determine ticket prices and ticket availability in the market. Thoughtful route planning is critical to the financial success of a tour and a good booking agent should make sure you are not playing in Atlanta one night, Chicago the following night and Jacksonville the next.  Route planning can be a challenge for even a seasoned booking agent due to the large number of competing tours and the limited availability of quality venues in highly desirable markets.

Booking agents typically collect a 50% deposit on the show guarantee from the promoter once the show is booked. They usually charge 10% of the money the band gets paid for the show for their services. For example if the booking agent negotiates a $2000 guarantee for a show, they would collect a $1000 deposit, keep $200 (10% of $2000) then send the band $800. The band or their manager / road manager would collect the balance ($1000 in this example) from the promoter or venue after the show. 

Tour Manager

The Tour Manager handles all the details of life on the road for the artist during a tour. They will arrange transportation, hotels and meals for each stop, make sure the equipment is accounted for and maintained plus manage the crew. The tour manager makes sure the venue has the stage, sound and lighting set up as requested and that the band is paid per the terms arranged with the booking agent. They manage and safeguard the cash collected while on the road. The Tour Manager will work with the tour publicist to make sure the artist shows up on time for scheduled interviews, appearances and promotions in each market. It’s the tour manager who puts out all the inevitable fires that come up at each stop during the tour.

The tour manager is also responsible for maintaining the tour plan and budget set up by the manager, business manager and booking agent. They are typically paid a salary, per diem or a set amount per tour.

John Doe is the founder of the seminal Los Angeles punk group X, a solo artist and actor. John answers questions from our community members in the WWJDD? blog. Photo by Autumn de Wilde. Click here to check out John Doe's new release with The Sadies, Country Club.

A Question from Michael in Brooklyn:

Mr. Doe,

I stopped in to ask a familiar question. I was in a contract agreement with a manager and he said he didn’t want to be my manager because we had an argument over him canceling a show because he didn’t trust the producer’s ear (mixing). The manager didn’t come to the studio for a month and didn’t hear the music we recorded. See the manager did hear the music before he cancelled the show. But now he’s not my manager and all the music I recorded is on his computer.  The producer made the majority of the beats, does he only get the producers fee of 2%? He didn’t write but one verse on one song. Does he get publishing or writer’s rights besides that one song?

Peace,

Michael

What Would John Doe Do?

Hey Michael,

Give all the songs new titles & re-record them w/ someone that you trust (maybe leave out the one w/ the verse written by the "producer").  Never sign manager agreements before you actually have something to manage.  Those "managers" are just trying to take advantage of you & yr art.  In this ridiculously litigious society people need to keep their music on their own hard drives, a very sad but true situation.
onwards & upwards
 thanks for writing,
Jd  

If you have questions for John Doe about music, the music business or life feel free to email them to wwjdd@knowthemusicbiz.com.

For more information on John Doe check out theejohndoe.com or YepRoc.com .

Alyson Miller is a CPA who provides specialized accounting and tax services solely to music and entertainment clients.

Taxes are usually the last thing on the agenda of the touring musician but as tax season approaches it’s a good time for you to get organized. There are a number of tax deductions that are unique to musicians and therefore handled incorrectly on the tax return or forgotten all together. Before we discuss what can potentially lower your taxes, let’s talk about income.

It’s a common misconception that if you don’t receive a 1099-MISC for something then you don’t have to report it.  Income or compensation that you receive for anything - shows, session work, teaching, bartending or whatever it may be - must be reported, including cash, regardless of whether or not you get a 1099.   If you’re in a band with several members, beware that club owners and promoters hate issuing individual 1099’s to each band member, so often times the band “leader” will receive the 1099 and report the entire amount on their Schedule C.  The “leader” then has to issue 1099’s to each member of the band or any other person paid (sound, lighting, guest musicians) so that it can be taken as a deduction on the Schedule C.  Don’t stick yourself with all of the income and forget the deduction.   

Here’s a list of the most important items that can potentially lower your taxes. 

Travel

Travel expenses are allowable deductions on you tax return.  So, if you have a show in a location that is far enough away from home such that it is impossible or inconvenient to return home, you can deduct it.  Deductible items include hotels, airfare, phone calls home, rehearsal hall rental, and anything else related to the performance.  If stops are made along that way to other cities (for example to visit friends) then that portion of the trip and the related expenses are not deductible.  Always keep receipts for every expense along with tour schedules and any other documentation that you may have.

Meals  

Meals associated with overnight travel are also deductible at 50% of the expense.  Other meal expenses incurred that are associated with the “business” of being a musician, say meeting a potential band mate for lunch to discuss the possibility of becoming a member of the band or meeting with your accountant, could also be 50% deductible.  The discussion must primarily be about business. If keeping receipts is not something you’re very good at, consider using the IRS allowable deduction that varies by city.  The IRS requires the who, what, where and why for these expenses.  One suggestion is to keep business cards as part of your documentation.

Equipment

The purchase of equipment (generally anything with a cost of $500 or more) is depreciated over 5 years.  What this means is that you can take one-fifth of the cost of the item each year for 5 years unless you dispose of the item.  The IRS also allows you to take the full cost of the equipment in 1 year if you choose.  This is called the Section 179 Deduction.  The cost of cables, strings, and other small items less than $500 can be taken as a deduction in the year that it is purchased.

Vehicle Expenses

 There two ways to calculate the deduction for your vehicle.  The IRS allows you to use which ever one gives you the biggest deduction.  One method is to keep a log of your travel in a calendar, notebook, or some type of log book and use the standard mileage deduction (48.5 cents per mile in 2007).  Record the mileage to and from shows, trips to purchase supplies or any other business related activity.  The other method is to keep actual receipts for gas, repairs and maintenance, insurance, property taxes, and depreciation of the vehicle as the deduction.  Generally vehicles such as buses yield a bigger deduction when the actual expenses are used.

Home Office or Studio

If you have a room in your home that is exclusively used for your business whether it be for paying band expenses, rehearsing, or it’s set up as a studio, you might be able to take it as a deduction.  Exclusive use is the key.  It cannot be used for any other purpose but for your business.  The corner of your living room with a desk does not qualify.  If you can justify a space used exclusively for your business, you can take a percentage of the square footage for the business portion.  The percentage is then applied to your rent, mortgage interest, utilities, etc.   

Other

There are other deductions that when taken in moderation are allowed such as CDs, concert tickets, and music publications.  Ordinarily, taxpayers cannot take these as deductions but as a musician you must keep up with the industry.  Most of the time these are classified on the tax return as research.  Wardrobe can also be deducted if it is exclusively used on stage. 

This not meant to be a comprehensive list of deductions.  The tax code changes all the time. Check the IRS tax code (www.irs.gov) or with a tax professional before you do anything.  

One last important thing………

If you use an accountant or tax professional, it’s best to use someone who has other clients in the music industry.  Unfortunately, there aren’t many of us around so interview your accountant and make sure they are at least interested in what you are talking about and willing to understand your “business” of being a musician. When choosing an accountant, one size does not fit all. It’s like choosing a doctor. If you had a pain in your head you wouldn’t go to a podiatrist.