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Signing a contract and income taxes

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  • Signing a contract and income taxes

    Does signing a contract from a venue automatically mean you have to pay income tax on your earnings when you perform?

  • #2
    Earning income means you automatically have to pay income taxes.

    What steps you might personally take to avoid claiming money you earn is something that probably shouldn't be discussed in a public forum.

    But no, a signed contract isn't something that the IRS would probably be aware of. A check written to you--especially one from a business that would deduct that payment from their taxes almost is something they would be aware of.
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    • #3
      Having a contract is not the same as getting paid.

      Likewise, just because you don't have a contract, check, or 1099 doesn't mean you don't have to pay taxes on it. You have to report all earnings, including cash, tips, etc. Don't doubt me; I work for a "taxing authority" and I know these things. You can, however, keep records of your expenses (mileage, equipment, strings, repairs, etc) and use those to offset that income.

      And to clarify, "paying taxes on" income is not the same as "reporting" the income. Depending on various factors (deductions, etc), you may not have to "pay taxes" on it even though you reported the income.
      <div class="signaturecontainer">The best piece of advice I ever got was when John Mayer told me, &quot;Don't be a name dropper.&quot;</div>

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      • #4

        And to clarify, "paying taxes on" income is not the same as "reporting" the income. Depending on various factors (deductions, etc), you may not have to "pay taxes" on it even though you reported the income.


        ^^^THIS. My experience is that extra-income coming from playing music is more of a pain-in-the-ass tax-wise than anything else. Unless you're earning/reporting a LOT of income, it's pretty easy to come up with enough legitimate deductable expenses from playing music to offset the income.
        _________________________________________________
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        https://www.facebook.com/JumpStartYourParty
        http://www.weddingwire.com/biz/jumps...587fe5f12.html

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        • #5
          Only accept cash when getting paid. Problem solved.
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          • #6
            Only accept cash when getting paid. Problem solved.


            Cash payments are taxable too. Granted, they are harder to track, but are taxable nonetheless.
            <div class="signaturecontainer">The best piece of advice I ever got was when John Mayer told me, &quot;Don't be a name dropper.&quot;</div>

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            • #7
              I wonder if you can write off maintenance you do yourself to your instruments?

              Hm, I guess then you'd have to report the income on the instrument maintenance.

              Man, the government thinks of *everything*.

              (well, except for the important stuff)
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              • #8
                I wonder if you can write off maintenance you do yourself to your instruments?


                Certainly you could write off any parts you purchased. But "time" you spent cleaning and intonating them? Nah. I don't think so.
                _________________________________________________
                band websites:
                http://www.JumpStartYourParty.com
                https://www.gigmasters.com/Rock/Jump-Start
                https://www.facebook.com/JumpStartYourParty
                http://www.weddingwire.com/biz/jumps...587fe5f12.html

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                • #9
                  Big mistake IMO. No reported income, there's no business, so there's no writeoffs. Just because a guy pays you in cash doesn't mean he's not going to call you in January and ask for your SS number so he can 1099 you. What are you going to say? No? I hope your not on the "pay your fair share" bandwagon. All these cats who want the "rich" to pay more, but cheat on their own taxes get my goat.


                  Only accept cash when getting paid. Problem solved.

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                  • #10
                    All these cats who want the "rich" to pay more, but cheat on their own taxes get my goat.


                    I'd venture that virtually everyone who itemizes their business expenses "cheats" to some degree or another. Those who make more likely cheat more as well.
                    _________________________________________________
                    band websites:
                    http://www.JumpStartYourParty.com
                    https://www.gigmasters.com/Rock/Jump-Start
                    https://www.facebook.com/JumpStartYourParty
                    http://www.weddingwire.com/biz/jumps...587fe5f12.html

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                    • #11
                      That's a personal matter if one wants to take the risk of being audited. I've been audited several times, and it's no fun if you end up owing significant money. In fact, it's no fun either way. I have no issue with how a person decides to report their income. But I think that if you do skim, inflate deductions, or flat out don't report income, you have no business telling others to pay their "fair" share, whatever you might think that is. Not saying oldguitarplayer does that, but I do think his method is shortsighted.


                      I'd venture that virtually everyone who itemizes their business expenses "cheats" to some degree or another. Those who make more likely cheat more as well.

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                      • #12
                        I'd venture that virtually everyone who itemizes their business expenses "cheats" to some degree or another. Those who make more likely cheat more as well.


                        I never have. Why bother?

                        A little bit of cheating seems pointless, and as for big cheating, if I cared that much about money, I'd still be a corporate executive somewhere...

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                        • #13
                          I never have. Why bother?

                          A little bit of cheating seems pointless, and as for big cheating, if I cared that much about money, I'd still be a corporate executive somewhere...


                          I put "cheat" in quotes because the truth is so much of the tax code is such a mess that it's hard to comply 100% even if you really wanted to. And a lot of it almost begs for "cheating". Is every meal written off as a business expense by people truely a 'business' lunch? Musicians are allowed to write off clothing purchases as long as they are "costumes". i.e. are ONLY worn while performing. But has every musician who writes off those new "gig" shoes NEVER worn them for some other occassion? By law, you're supposed to claim not only cash payments, but tips as well. Technically anyone who pockets that $5 bill they got for playing Mustang Sally last Saturday without claiming it as income on their 1040 is a tax cheat.

                          Just saying there are some gray areas in the code that increase as one moves up the income ladder.
                          _________________________________________________
                          band websites:
                          http://www.JumpStartYourParty.com
                          https://www.gigmasters.com/Rock/Jump-Start
                          https://www.facebook.com/JumpStartYourParty
                          http://www.weddingwire.com/biz/jumps...587fe5f12.html

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                          • #14
                            Big mistake IMO. No reported income, there's no business, so there's no writeoffs. Just because a guy pays you in cash doesn't mean he's not going to call you in January and ask for your SS number so he can 1099 you. What are you going to say? No? I hope your not on the "pay your fair share" bandwagon. All these cats who want the "rich" to pay more, but cheat on their own taxes get my goat.
                            I'm with you totally!!
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                            • #15
                              As noted above, you are required by law to report your income (assuming that your total income is above a relatively low level).

                              Whether you have a tax liability on your income depends on a lot of factors (at least in the USA). Depending on your circumstances, there may be expenses or credits available to reduce or eliminate your tax liability on that income.

                              Signing a contract does not necessarily mean that you will have to pay taxes on the income from that job. However, if the hiring agent reports the payment(s) made to you, and you don't report that income, you have substantially increased your chances of triggering an investgation (audit).

                              Mark C.
                              "Good tools are expensive. Cheap tools are damned expensive."

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