Playing for pay

[fred d]

Been offered a gig at some local coffie shops and retirement homes for Pay. my question is how do we pay taxes on this income. Right off expences? Pay copy right fee for songs, Does the group have to have a business license. Encorprate. ECT thanks for any help

[JeffD]

It will likely be so little money as to have insignificant tax consequences, and may in fact not cover total expenses.

I am assuming you are in the US. In any case my answers only apply if you do.

By the letter of the law, as I understand it, you have to declare the income and you can write off your expenses against it.

By the letter of the law, as I understand it, you, or the venue, has to pay royalties for any music not in the public domain. The coffeeshops may already have agreements with ASCAP and BMI, in which case it is their responsibility. The retirment homes I don't know.

As I understand it your group does not need a business license, or to incorporate.

Things become kind of complicated when you split up the money you have earned. Are your band mates being treated as "contractors" to you? If so, you give them a 1099, in which the taxes on their income is their responsibility. You would want to document you got one lump sum from the venue and paid each band mate so much. Your income is the total amount, but your contractors fees are legit expenses, so you are left with your share as net income anyway. You can, as I understand it, also each be providing musical services to the venue independantly, in which case the venue should split up the money and it is up to each of you to take care of your own taxes. I don't know if you need a 1099 from the venue.

Don't forget you have state income tax as well, in every state you play in.

And if you sell any stuff - like CDs or T shirts, you have sales tax in every state and county you sell in.

I am not a tax specialist - you should contact a professional. But I have wrestled with this stuff in the past, and I offer my comments for entertainment purposes.

A lot of folks ignore it all together, as being too little money to worry about. By the letter of the law that is not legal - and your tax professional could tell you what risks you would run.

The royalties thing is a real can of worms, and some would argue a can of worms best left unopened. I used to run a coffeehouse and went through this.

Good luck. Don't let the details sour you - playing out is great fun, and you should charge money or at least pass the hat, as music should not be free. IMHO

[jim_n_virginia]

Your allowed to make a certain amount before you have to pay taxes on it. I forget how much that amount is because I go over it every year but it is like $600 or $800 dollars or something like that.

As long as you make less than that amount I would worry about it and just put the money in your pocket.

If you don't play for pay regularly (or infrequently) just pocket the cash and if you gig regularly give Uncle Sam his cut, don't make it complicated. #http://www.mandolincafe.net/iB_html/non-cgi/emoticons/mandosmiley.gif

[farmerjones]

Congratulations -
Even if it wasn't enough to tax i'd keep track of income vs. expenses. Especially in case it becomes a regular thing.
I'd expect the venue to procure the required liscences. But remember if you play your own material and/or public domain tunes it's a non-issue. I've got to the point where i've got printed copies of our tune list to gently roll up and smack the liscencing goons with.

Hope it's the start of a long and prosperous deal!

[jim simpson]

"Your allowed to make a certain amount before you have to pay taxes on it. I forget how much that amount is because I go over it every year but it is like $600 or $800 dollars or something like that".


I always understood it to be $600.00 (per gig not year's total?). Cash is preffered but one business wanted to pay by check so I requested individual checks for each member - the venue understood and did that.

[JeffD]

Your allowed to make a certain amount before you have to pay taxes on it. I forget how much that amount is because I go over it every year but it is like $600 or $800 dollars or something like that.
Yes but don't you, technically speaking, still have to report it next time you file?

[Don Christy]

I'm no tax expert, but assuming you have other regular taxable income, I don't think you're allowed to make anything without reporting it.

I believe the $600 (or so) limit being discussed has to do with the requirement on the venue of reporting the payments. If they report the payments, you're much more likely to be on the radar.

Don

[Timbofood]

SHHHHH! Unless you start making tons of money or, feel terribly guilty about anything over ($600.00) and the venue files with the IRS. If they don't say, why should you pay. Again, unless you feel guilty

[MASadict]

Having my own photography business, with the advice of my accountant, here is what I have done for the past 4 years.
1) get a tax ID number. #I have an ID for myself DBA as my photography company. #I was advised to do this instead of incorporating.
2) keep accurate records
3) document everything. #Everything includes mileage, strings and anything that is necessary for your performance
4) your instrument (in my case my camera equipment) can be depreciated, thus giving you certain tax advantages. #

Any income recognized is added to my tax return. #So far it hasn't adversly affected my tax burden, and has actually been advantageous. #The first year I started I had spent quite a bit of money on equipment and showed a loss while still making almost enough money to pay off my equipment.

Of course I am not an accountant, so check with your accountant for his advice before your venture.

[thistle3585]

Its $600 a year from an establishment not per gig, so if you do six shows, at the same place, for $100 each this year then they should send you a 1099. As a referee, I do games through a variety of associations. Each association will report my income of $600 or more annually and they will issue me a 1099. I operate under my social number and just keep track of related expenses for my personal taxes. I will go ahead and report income less than the limit from an organization just because the IRS already has me on the radar as a subcontractor.

If you are playing in a group then it becomes a hassle because you need to divide up the taxes and expenses in addition to the income.