Join Richard Stim for an in-depth discussion in this video What happens at an audit?, part of Taxes and Accounting for Music.
- If you are selected for a field audit,…in which an IRS auditor meets with you…either at IRS offices or at your place of business,…you will receive a letter explaining…the reasons for the audit,…and you'll be told which elements…of your return are subject to investigation…and what specific documentation is required at the audit.…Keep in mind that the IRS has to have…specific reasons for its investigation,…and can't use the audit as a pretext…for inquiring about other unrelated items.…
You should have a tax professional…accompany you at the hearing.…You may be hesitant to pay for such services,…but it's very likely that it will be worth the money.…The interview.…Like all field audits,…a music business tax audit starts with an interview.…Expect to be asked about the roles you play…in the music industry.…Whether you are self employed,…whether you've been examined previously,…as well as your sources of music income…and how they're reported.…There may be preliminary questions…about financial record keeping and your contracts.…
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