I think it's safe to say that all of us are going to be seeing more and more of this. Times are changing. Businesses are having their feet held to the fire in terms of reporting. The IRS is agressively scrutinizing businesses that operate in what have traditionally been "cash" industries to ensure they're collecting all the revenue that is legally owed.
Be prepared. If you're not receiving 1099's for your gigs today ... sooner or later you will be! More and more venues that never issued 1099's to bands in the past are starting to these days.
MartinC wrote:I get 1099's every year from my agents, and I have received them from individual clients at corporates. I played in one club for two years and they issued a 1099. I don't know if I ever got one from a bar-I don't think so. A friend of mine was recently auditied and they not only wanted the 1099's he issued, but w9's as well.
Walking away from a gig because they want to 1099 you means you weren't charging them enough to pay your taxes or you don't want to pay them. Is there any other reason?
I spent a lot of years mostly playing music, thinking about playing music, or trying to play music, and I didn't make much money. Things have changed for me, and the amount of tax revenue I contribute is these days is, well, incredibly messed up. That's my opinion, so I don't begrudge anyone who thinks that 50.00 from the club is all theirs. But when you start getting several hundred dollars for a gig, you kind of realize that no one is going to pick up your tax bill. And if you only make 100.00 a night in a club once a week, that's still 5k a year, and the club does want to deduct that expense regardless of if they are skimming the till or not.
I agree with spacenorman that things are getting tighter. I actually voted for Obama, even though I knew that he was going to go after tax dollars the same way he went after terrorists. He's coming for your money with drones baby, so be prepared. Keep records of everything, learn about the tax laws, and don't spend Obama's money. Either that, or filch your ass off, and hope the man don't come knocking.
I understand the "they-ain't-gettin'-any-of-my-$50" mindset. I've played more of those gigs recently than I expected. I do know that this profession-turned-hobby will result in a net loss when I sit down and do my taxes in the next few weeks, and I think it will be the same for a lot of us. Did I see Dave imply that, even though he makes quite a bit more per gig than most of us?!
I've filed schedules "C"s for over forty years as a self-employed piano technician. I've been audited, and I know that some of my colleagues live in mortal terror of an IRS visit. I wonder if this fear of the unknown is behind the OP's post.
When it happened to me, they ended up owing me money after I hired an accountant. Apparently, it's fairly common for people like us who try to do this right to leave money on the table because we don't know enough about the deductions that are available to us. Do some research.
Don't get anal about record keeping. If your deductions are reaosnable in their eyes, they won't sweat it. They're interested in tracing income more than reasonable expenses.
The reality is that your band income is small potatoes. They've got bigger fish to fry.
Originally Posted by guido61
MartinC wrote:I used to think that too, until I was auditied by the irs. They ignored my main income-the audit was about my music income. They focused on my deductions. I had declared a profit for the couple of years before the audit, and declared a profit for the year audited. First they tried to classify it as a hobby, but my accountant made the case that there was enough activity to prove it was a business. They wanted proof of my expenses. I had a log of every gig, the address where it was, and the miles driven to get there. Also, every set of strings, etc, and the miles driven to get to the music store, every cd bought, every lesson taken. They wanted to see the 1099's I had issued the other band members. I was studying with a gypsy flamenco guitarist from spain and i explained that he only took cash. They allowed it, but said next time get a receipt.
I hired my accountant to represent me, and never spoke to the irs. My accountant's bill pretty much wiped out my profit for the year........
I'd been taking a pretty low overhead approach to gigging by then-almost all corporates, little gear, and no rehearsals-I was making money every year, even when buying equiptment. Hard to bitch about making a little extra and getting to write off toys, er, I mean tools.
In fact I admit to being proud of the fact I was actually making a profit, kinda like feeling like I'd finally figured something out. Even today, the pittance I get from CD baby and the few gigs I do usually results in a small profit, but last year I threw down for a new computer and recording gear, so I'll try to offset some income from the day gig, and rest somewhat easy knowing I declared a profit most years.
Well there is something to be said for running the numbers and coming up with some taxable income! The alternative makes it clear that we're spending many hours - and some of it clearly feels like "work" - and yet we have nothing to show for it.
I know my experience is not necessarily what others should expect. Some of my colleagues who have been audited have told me as much. I was actually surprised when they showed relatively little interest in my deductions. They were all about accounting for every deposit and wanted a piece of it unless I could prove that it wasn't taxable.
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