What Tax Forms to Send Your Music Accountant
I’m often asked what forms and information are needed to have your tax return prepared. Let’s discuss what to you need provide for us in order to prepare the tax return for your music business. This list is not all inclusive, but covers the basics, let’s get started!
Forms Needed to Prepare Your Music Industry Tax Return
- We will need your Form W-2. This form shows all of the income you received from your employer or “day job.”
- Form 1099-MISC. This IRS form will show any royalties you received from your music, as well as any income where you made over $600 for the year, from gigs, for example. (Find out who your music business needs to send 1099 forms)
- Form 1099-INT. This form will show any interest you received from banks.
- Form 1099-DIV which will show any income you received as dividends from investments you hold, such as stocks.
- Form 1099-G which shows the amount of any state tax refunds you received last year. Also, if you were unemployed anytime last year this form will show the unemployment compensation you received from the state.
- Form 1099-R, this form shows the amount of income from retirement accounts, such as pensions, IRAs, 401Ks, and 403Bs if you withdrew money from your account. While you should only withdraw from your retirement account after you’ve reached 59.5, if you needed the cash last year and it wasn’t retirement time, you will likely receive a 10% tax penalty for this automatically unless you qualify for one of the exceptions.
- The total amount of cash and/or checks you received last year. this includes money you received ‘under the table’ too! Be sure to include PayPal payments you received as well as any direct deposits you received from providing products such as CDs and merchandise, or services such as gigs.
Those are the most common income types musicians receive during the year. Now let’s talk about deductions for music and other expenses.
Expense Information to Prepare Your Music Business Tax Return
- Medical expenses, including insurance premiums, include those costs. prescription drugs and co-pays are also part of the medical expenses you should provide. Don’t forget to also include dental and vision expenses as well.
- Home expenses, if you are a homeowner this will include your mortgage interest statement from your lender, this statement will also include the amount of real estate taxes, and property mortgage insurance you paid. If you’re using a portion of your home as a studio, rehearsal space, or office, please provide the square footage of that space and the total for your home. You will also benefit from including total utilities, repairs and maintenance.
- Form 1098T and/or 1098E forms. These include the total student loan interest you paid last year and/ or the amount of tuition you paid. You may also include receipts for books and materials you purchased. Remember, any courses you take may qualify, you do not have to be a full-time student to take advantage of the education and courses deduction.
- Charitable contributions may be deductible, although most people think of the religious deduction, organizations such as universities, science, medical, and other qualify as charities as well. Your donation may be in cash or property but be sure to send us details regarding your donation. However, donations to “kickstarter” campaigns are not considered charitable contributions unless the organization is a charity.
- Travel expenses. If you are self-employed or your job did not reimburse you for job-related travel, include travel by plane, train, and bus as well as any gas, oil, repairs and maintenance, baggage fees, and hotels. However, does not include any travel to and from your job day-to-day.
- Meals and entertainment expenses. If you are self-employed, please provide the total you spent last year for meals and entertainment while on the road, yes. all of the health broccoli and carrots you consumed while on tour! However, if you are employed and your employer did not reimburse you for job related meals & entertainment, include those amounts.
- Daycare Expenses if you have children or other dependents, provide the care-provider’s information including name, address, and id number, along with the amount you paid during the year.
- Album related expenses, if you produced an album last year. These include costs such as advertising and marketing, studio rental, mixing and mastering fees, cd production, producer and session musician fees as well.
What type of music industry income and expenses did you have last year? How did you keep track of them and send them to your tax preparer?