Join Richard Stim for an in-depth discussion in this video Home studio and home office, part of Taxes and Accounting for Music.
- If you use a portion of your home…exclusively for your music business,…you can deduct some of your rent, mortgage or utilities.…Unfortunately, the home office expense…is one of the most abused deductions,…and the IRS is vigilant about violations.…Learn about home office rules before claiming the deduction.…As a general rule,…you cannot take the home office deduction…unless you use the space regularly…and exclusively for business.…
Exclusive use means that you use…this portion of your home only for business.…So, for example,…if the space is also used as a guest bedroom,…or to store your spouse's crochet supplies,…you cannot claim exclusive business use.…The IRS is clear on this.…Any personal uses of the space,…will disqualify you from claiming…the home office deduction.…Satisfying the "regularly and exclusively"…requirement is half the battle.…
You should also be ready to prove…that your home office studio is…your principal place of business,…or you use a separate structure on your property,…exclusively for business purposes.…
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