Join Richard Stim for an in-depth discussion in this video How long do you need to keep tax records?, part of Music Taxes and Accounting.
- Start with the basic rule that the IRS is prohibited…from asking you about returns…that are more than three years old.…That is, three years from the date of your last return.…There are exceptions.…Your tax returns may be based on financial records…that date back more than three years.…For example, you may be claiming five year depreciation…on your Marshall amp.…In cases like that, you should keep records and receipts…for as long as the item may be audited.…In addition, there are exceptions…based on the statute of limitations for various offenses.…
For example, you can be audited going back six years…if you fail to report more than 25% of your gross income.…Finally, there may be non-tax reasons…to retain financial records or receipts.…For example, when dealing with creditors, warranties,…or for insurance claims.…These rules aside,…tax experts advise that if possible,…tax returns, W-2s,…and 1099s should all be kept indefinitely.…
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