Members Thunderbroom Posted August 2, 2005 Members Share Posted August 2, 2005 I know that there have been threads on here about this before, but with the search function being disabled... This issue has come up with one of my bands. Some in the band have commented that taxes are due on money earned from paying gigs. While others have said that it's not a big deal and those folks that are concerned about it at this point (only one paying gig booked with another potential one booked in October) are being silly. It was also suggested that the band open a bank account for purchasing things such as a stage banner and to keep track of funds, however meager, that the band has. Your ideas? Link to comment Share on other sites More sharing options...
Members james on bass Posted August 2, 2005 Members Share Posted August 2, 2005 I would have to say no T-Broom. Unless there are members that are in the music union and making a living from music, I would say take what meager earnings you receive and leave the taxes to your real job. I guess if you want to be totally ethical, you should claim it, but then you would have to have receipts, all of you would have to claim it etc... And you know as well as the rest of us here that you have way too much gear to write off against what you earn from music! As for sharing band expenses.... From my experience, everyone should kick in money when/if needed for promo items, rentals etc... As much as you like the people you are playing with, someone is going to come out the winner and the others screwed when the band breaks up and there is band equipment in the fold. I have done it twice with bands, and while I didn't lose much, others wound up with parts or all of a PA, a few mics etc... Link to comment Share on other sites More sharing options...
Members catphish Posted August 2, 2005 Members Share Posted August 2, 2005 there is a specific dollar amount that must be earned to require filing, and I suspect most people on this board are FAR below that level of compensation. Myself definitely included. I think the figure was 5 or 7 thousand dollars a year (per person) in Illinois. As for the checking account, that can come in handy. Link to comment Share on other sites More sharing options...
Members james on bass Posted August 2, 2005 Members Share Posted August 2, 2005 Originally posted by catphish As for the checking account, that can come in handy. You spelt chequing wrong! I've never had luck with the joint band bank account thing, but then, I've always been a hobbiest. A friend of mine gigged solid for a year and half with his original project. They put every penny into a bank account and had close to $15,000 with which they professionally recorded, stamped a 1000 or so CD's and ultimately got some great exposure. Now the singer had to quit the band for personal reasons and now she's left with nothing more than fond memories. On the other hand, the guitarist just got hired last week by a very well known all female metal band, so I guess it was money well saved for her. She'll be touring the world and living the dream. Link to comment Share on other sites More sharing options...
Members Thunderbroom Posted August 2, 2005 Author Members Share Posted August 2, 2005 Originally posted by catphish there is a specific dollar amount that must be earned to require filing, and I suspect most people on this board are FAR below that level of compensation. Myself definitely included. I think the figure was 5 or 7 thousand dollars a year (per person) in Illinois. As for the checking account, that can come in handy. So how do you guys handle stuff? As you likely figured out, I'm the "silly" one that brought up the issue. Since I own my own business and pay estimated taxes already, it's not a big deal to me. My checking account suggestion has been ignored by the band. Maybe I am making too much of it, I guess I've just been brainwashed in to following the law. Link to comment Share on other sites More sharing options...
Members catphish Posted August 2, 2005 Members Share Posted August 2, 2005 Originally posted by Thunderbroom So how do you guys handle stuff? the keys player collects gig money and deposits it into a checking account for band purchases. That's about it. Don't sweat the taxes. Link to comment Share on other sites More sharing options...
Members WillPlay4food Posted August 2, 2005 Members Share Posted August 2, 2005 Originally posted by catphish there is a specific dollar amount that must be earned to require filing, and I suspect most people on this board are FAR below that level of compensation. Myself definitely included. I think the figure was 5 or 7 thousand dollars a year (per person) in Illinois. As for the checking account, that can come in handy. That's total taxable income, not just band income alone. If you have a full time job then you should be above the $7000 (approx. amount, exact amount can be determined by looking at pub 17 and deciphering IRS speak) threshold and would need to report all band income, minus expenses (mileage, equipment, banners, etc.). If you go above $400 in net income you have to pay 15.3% in social security & medicare taxes as well. If you want to be totally on the up and up, just keep great records about everything. Keep a logbook of where the shows were, mileage to & from shows, keep all receipts, etc. Otherwise, your best bet would be to do everything in cash. Link to comment Share on other sites More sharing options...
Members 1tallbassguy Posted August 2, 2005 Members Share Posted August 2, 2005 Cash dawg!Cash! As far as everyone pitching in to buy stuff...bad idea IMO. As has been metioned, the band will break up some day, and when that happens it needs to be clear who owns what. If something needs to be purchased, everyone should buy a part. The mixer and amp is mine.The speakers and cables are his.The effects and lights are hers. Thats the ticket. yeah! Link to comment Share on other sites More sharing options...
Members Thunderbroom Posted August 2, 2005 Author Members Share Posted August 2, 2005 I swear that I've read on here before that some bands have been required to provide tax info and have been issued 1099's come tax time. If a band is not set up to handle this, what do you do...say "uh, we're a cash-only band"? My guess is that you just politely turn down the gig. I guess maybe the best idea is to keep it very simple...whatever that means. Link to comment Share on other sites More sharing options...
Members catphish Posted August 2, 2005 Members Share Posted August 2, 2005 Originally posted by WillPlay4food That's total taxable income, not just band income alone. If you have a full time job then you should be above the $7000 (approx. amount, exact amount can be determined by looking at pub 17 and deciphering IRS speak) threshold and would need to report all band income, minus expenses (mileage, equipment, banners, etc.). I'm not an expert, but I don't think this is accurate. Link to comment Share on other sites More sharing options...
Members Thunderbroom Posted August 2, 2005 Author Members Share Posted August 2, 2005 Originally posted by catphish I'm not an expert, but I don't think this is accurate. I'm hoping J the D and/or bassplayer77070007707070 will stop by the thread and chime in. Link to comment Share on other sites More sharing options...
Members The Insomniac Posted August 2, 2005 Members Share Posted August 2, 2005 Most bands I have been in we have cashed the check at the bar and divvied up the money that night. Everyone gets an equal share. Money for wear and tear on the equipment, trailer licenses, bulbs and such come off the top with a receipt. Things like banners and such are paid for after we cash in on a good paying job. If our band completely breaks up we will sell the stuff we have bought together (Macky board, a couple Yamaha speakers and some other stuff that won Link to comment Share on other sites More sharing options...
Members melancholy mechanic Posted August 2, 2005 Members Share Posted August 2, 2005 if you get paid in cash and none of the venues issue you 1099's then there is almost no way for the feds to track it. any business that pays your band more than $600 in any given year is techincally supposed to issue the band a 1099 i think but this is more work than most places are willing to do. Link to comment Share on other sites More sharing options...
Members Thunderbroom Posted August 2, 2005 Author Members Share Posted August 2, 2005 Originally posted by melancholy mechanic if you get paid in cash and none of the venues issue you 1099's then there is almost no way for the feds to track it. any business that pays your band more than $600 in any given year is techincally supposed to issue the band a 1099 i think but this is more work than most places are willing to do. Wouldn't a venue be able to write off paying a band to perform as a business expense? It's that expenditure that they are using to sell alcohol (and maybe food). It's like advertising, which I know is tax-deductible. Link to comment Share on other sites More sharing options...
Members melancholy mechanic Posted August 2, 2005 Members Share Posted August 2, 2005 Originally posted by Thunderbroom Wouldn't a venue be able to write off paying a band to perform as a business expense? It's that expenditure that they are using to sell alcohol (and maybe food). It's like advertising, which I know is tax-deductible. yeah they could totally use it as a deduction, cept they usually just pay the bands from the till and then "that money" never existed. just easier to do it that way than to deal with the paperwork i guess. Link to comment Share on other sites More sharing options...
Members BEAD Posted August 2, 2005 Members Share Posted August 2, 2005 Singer takes the money from the gig and evenly pays all band members. We all fill our gas tanks and then... the money is gone. Link to comment Share on other sites More sharing options...
Members Emprov Posted August 2, 2005 Members Share Posted August 2, 2005 My rule is if the club owner pays with a check, it's taxable. If it's a cash transaction, put it in your wallet and don't tell the IRS about it. Link to comment Share on other sites More sharing options...
Members hawkhuff Posted August 2, 2005 Members Share Posted August 2, 2005 Originally posted by Thunderbroom I know that there have been threads on here about this before, but with the search function being disabled...This issue has come up with one of my bands. Some in the band have commented that taxes are due on money earned from paying gigs. While others have said that it's not a big deal and those folks that are concerned about it at this point (only one paying gig booked with another potential one booked in October) are being silly. It was also suggested that the band open a bank account for purchasing things such as a stage banner and to keep track of funds, however meager, that the band has.Your ideas? The best way to get paid, if you have control over this is by cash. However, if they write checks, then ask for checks to be no more than $500. Of course, it also makes a difference who the check is written to. That person may be liable for the tax burden. Also, check and see how the payer is claiming that money. If the nightclub has something equivalent to a consultant fee paid type voucher (a 1099 form) then you could be liable for the taxes as a group or as individuals. If you decide to have a band account how will it be controlled? That can be a tough one unless you formalize the agreement in some manner so that no single person has sole power over that account. It may not be much money now, but it can build to a good sum if things go well. Remember, it business first then frienship. What should motivate you is how you will protect yourself. Link to comment Share on other sites More sharing options...
Members WillPlay4food Posted August 2, 2005 Members Share Posted August 2, 2005 Originally posted by Thunderbroom Wouldn't a venue be able to write off paying a band to perform as a business expense? It's that expenditure that they are using to sell alcohol (and maybe food). It's like advertising, which I know is tax-deductible. If a business pays more than $600 a year to the same individual/business (in this case your band) they are required by law to file a 1099 form to deduct the payout as an expense. Link to comment Share on other sites More sharing options...
Members WillPlay4food Posted August 2, 2005 Members Share Posted August 2, 2005 Originally posted by catphish I'm not an expert, but I don't think this is accurate. I was just going by memory from when I worked as a volunteer for VITA (Volunteer Income Tax Association, run by the IRS) filing tax returns. I could be wrong, tax law changes every year, but some basic things remain the same. Like the fact that once you reach the taxable threshold for personal income no matter what the source, then all income needs to be reported. For personal tax questions, pub 17 is your friend. For partnerships (the band might be considered a partnership, I'm not sure, but I know it isn't a sole proprietorship) get pub 541. Pub 583 gives a good overview of which tax forms need to be filed for the person and the business. You'll need to get pub 17 and circular E for business tax filing instructions. Link to comment Share on other sites More sharing options...
Members brake Posted August 2, 2005 Members Share Posted August 2, 2005 unless you're in the union, {censored} it. even if you are, {censored} it. if they paid you in cash then you can get away with anything Link to comment Share on other sites More sharing options...
Members Perfessor Posted August 2, 2005 Members Share Posted August 2, 2005 This is what it's like to get audited. I was audited just after we got married due to claiming some driving mileage on a previous job. I was so glad to have my new job I through out all receipts and went on my way. The guy doing the audit was a pencil neck geek who, of course, didn't smile once. I was allowed to reconstruct my driving mileage but nothing else. I was fined 10% on top of it. It cost us $750 in 1985. I went home to get my check book and was followed by a plain clothes "enforcer" who drove an old heap with tape on the doors and dents all over. He followed us home, then back. He rode up the elevator with us and went in the same door and then disappeared behind a screen that was in front of a door. He was about 6'6"and 300 lbs. It wasn't like I went home for my shotgun or anything, but that's what happened. I pay all my taxes and always did. That means band income, too. You taxes ain't gonna break ya. You can write off legitamate purchases and if you get audited you get to smile and lay out all the receipts. I know a guy who was bold enough to tell the auditor his appointment said 10 am, it's 10 am and your not ready while he pointed at his watch. He then walked out. I wouldn't try this. Link to comment Share on other sites More sharing options...
Members Rowka Posted August 2, 2005 Members Share Posted August 2, 2005 I've got myself set up as a little LLC, Rowka Enterprises, LLC.I get payed by the clubs and then divy it out to the band members. Since the LLC is getting paid by the club, the LLC is responsible for the tax burden. I will 1099 the other band members for their shares. This relieves me (the LLC) of the tax burden for the monies I did not keep. Link to comment Share on other sites More sharing options...
Members WillPlay4food Posted August 2, 2005 Members Share Posted August 2, 2005 Originally posted by Rowka I've got myself set up as a little LLC, Rowka Enterprises, LLC.I get payed by the clubs and then divy it out to the band members. Since the LLC is getting paid by the club, the LLC is responsible for the tax burden. I will 1099 the other band members for their shares. This relieves me (the LLC) of the tax burden for the monies I did not keep. Also, if anything happens and you get sued, it's the LLC getting sued. This way you can protect your personal assets, like your car and house. (I used to be a computer consultant for an ex-IRS revenue agent turned attorney who sets up LLCs.) Link to comment Share on other sites More sharing options...
Members J the D Posted August 2, 2005 Members Share Posted August 2, 2005 What Rowka did with the LLC is the way to go (at least under Florida law). His single member LLC is ignored for income tax purposes but it gives him a presence separate from himself. By issuing Form 1099 to each band member he is allowed to deduct those payments from the gross proceeds. You are required to report any income of any type that you receive. Expenses for an activity are deductible at least up to the amount of income made form that activity. Expenses in excess of income are deductible if the activity is undertaken for the purpose of making money. If you repeatedly have losses you better have good support for the intent to make money or the excess deductions will be disallowed. A band is a partnership and every partnership should have a WRITTEN agreement detailing how the income is to be split and each person's responsibility for expenses. It should also include what happens if the band splits up and/or if an individual member leaves the band. It is a whole lot easier to figure that out while everyone is friendly with each other than when someone is angry or upset. Link to comment Share on other sites More sharing options...
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