Join Richard Stim for an in-depth discussion in this video Automobile expenses, part of Taxes and Accounting for Music.
- The IRS lets you deduct music business use of your car.…One thing to keep in mind however,…is you can't deduct the cost of driving…from your home to a job and back home.…That's considered a non-deductible commuting expense.…However you can deduct the cost of driving…to a temporary work location…outside the area in which you live…and you can deduct the cost of driving…between multiple job locations in one day.…Business-related parking fees and tolls are deductible…unless they are part of your commute.…
There are two ways to calculate the car expense deduction:…you can use the standard mileage rate…which requires relatively little record keeping…or deduct your actual expenses…which requires more record keeping…but might give you a larger deduction.…Whichever way you choose,…you'll need to have records showing…how many miles you drive for business.…In the past, musicians kept a mileage logbook…for this purpose but nowadays…technology provides mileage tracking apps.…
The easiest way to deduct car expenses…is to take the standard mileage rate.…
In this music business course, author Rich Stim covers the most important tax issues for musicians. He starts with the basics: determining if music is a hobby or a business for you and how that affects your deductions. He then discusses money and the sources that determine gross income. From there, he shows the items you can deduct from your gross income—mileage, studio spaces, touring expenses, and other miscellaneous deductions—that can add up to big savings. Next, he covers the different tax rules for individual musicians, bands, general partnerships, LLCs, and corporations, and explains how to get an Employer Identification Number (EIN) when you need one. Finally, Rich navigates through the tax forms, including Form 1040, Schedule A, Schedule C, Schedule SE, Schedule K-1 (Form 1065), Form 4562, Form 8829, and Form 2016, and provides advice on hiring a tax preparer or going the DIY route with tax software.
DISCLAIMER: This course is taught by an attorney (or other instructor) and addresses US law concepts that may not apply in all countries. Neither LinkedIn (including Lynda.com) nor the instructor represents you and they are not giving legal advice. The information conveyed through this course is akin to a college or law school course; it is not intended to give legal advice, but instead to communicate information to help viewers understand the basics of the topic presented. The views (and legal interpretations) presented in this course do not necessarily represent the views of LinkedIn or Lynda.com.
- Managing bookkeeping
- Counting income
- Claiming expenses and other deductions
- Understanding tax entities such as LLCs
- Getting an employer ID number
- Preparing and paying taxes