Top Five Tax Organization Tips for Musicians

“Another year is fast approaching. Go be that starving artist you’re afraid to be. Open up that journal and get poetic finally. Volunteer. Suck it up and travel. You were not born here to work and pay taxes. You were put here to be part of a vast organism to explore and create. Stop putting it off. The world has much more to offer than what’s on 15 televisions at TGI Fridays. Take pictures. Scare people. Shake up the scene. Be the change you want to see in the world.” 
― Jason Mraz

“The hardest thing in the world to understand is the income tax.” 
― Albert Einstein

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So, you've started to build your skills as a musician and gigs are starting to land in your lap. That's fantastic! But if you're like most musicians staying organized isn't on the top of your priority list each day. Sure, you may imagine yourself taking a day (or a week) off to finally go through those stacks full of financial "stuff" eventually. Yeah, eventually sounds good....

Here are my top five tax organization tips for musicians. Learned the hard way by someone who is now more organized (not more enthusiastic) when it comes to self-employment tax prep.

1. Have a Current Box or a Drawer that's sole purpose is to house music-related receipts for meals with colleagues, hotel stays for gigs, mileage logs, gig info/arrangements, instrument insurance, health insurance, rent/utility bills, music trip tolls, etc... If it's financial throw it in. If you hate organizing your life this is the most important first step you can make. Working on self-employment tax is often frustrating, so know where most of your info is supposed to be instead of tearing through random drawers and boxes in search of that Affidavit of Purchase Price for that used car you bought or sold last year.
   
2. Create a Home Office Space and use it only as a home office. The IRS guidelines for the home office deduction are found here. You can deduct a portion of rent/utility bills for this as long as it fits their guidelines. It helps keep your work and leisure activities separate and is a great place to teach lessons and store old tax records, sheet music and music gear.
   
3. Keep Track of Your Mileage or Travel Costs for lessons, gigs and rehearsals in case you can deduct it. If carrying around a log doesn't work for you (i.e. That thing is going to get lost!), consider using an online calendar or mileage app. Then, be sure to print out the info it stores so you can file it away once January 1st hits. The key is storing the information somewhere. I like using Google Calendar and Google Maps.
   
4. Consider Buying Health Insurance with Higher Monthly Premiums Instead of a Higher Deductible. Sometimes we just don't have the money to be shelling out for the better health insurance. I get that. But did you know that it's a lot easier for those of us who are self employed to deduct monthly premiums than the cost of care associated with reaching your deductible? (If you must go the high deductible route see if you can qualify for an HSA which has significant tax advantages.)
   
5. Save, Save, Save! The first time I got hit with an estimated tax bill on top of the April 15th tax deadline on top of my CPA's fee it took me several months to get back on my feet again. Several estimated tax deadlines fall during leaner times of the year, so create a cushion starting today. Aim for saving 25% of your before-tax income so you aren't sunk when the tax man cometh. Good Luck!
   

As in all things tax-related, be sure to work with a tax professional if you have any specific questions or concerns when filing. Keeping track of your information and expenses doesn't guarantee that you can write them off, but it will make it easier to find out. Also, be sure to check out these guidelines to see if your expenses are considered business or hobby expenses by the IRS.