Band Taxes


J

Judith Marrs

If a person were to have a band that made around $500 a week per player,
should he consider it a business and pay taxes quarterly or just consider it
a band and pay at the end of the year, deducting road expenses.

Thanks!!!
 
H

Helen P. OPlanick EA

If a person were to have a band that made around $500
a week per player, should he consider it a business
and pay taxes quarterly or just consider it a band and
pay at the end of the year, deducting road expenses.
It depends. See form 1040ES at www.irs.gov

Helen, EA in PA
50 miles, 3 days, 1 cause - Multiple Sclerosis Challenge Walk for the Cure
October 1 to October 3, 2004
Donate on-line at www.msandyou.org
 
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A

Arthur L. Rubin

Judith said:
If a person were to have a band that made around $500 a week per player,
should he consider it a business and pay taxes quarterly or just consider it
a band and pay at the end of the year, deducting road expenses.
$500 a week per player seems a bit much for a hobby.

I'm afraid it's a business. You'll also have to decide if
the band members are employees of the band (in which case
"the band" would have to file W-2s and employment tax
returns) or independent contractors (in which case
the band would have to file 1099s), and whether
"the band" is a separate entity from "a person",
and would have to file entity (perhaps partnership)
returns, or is considered an alter ego for "a person",
in which case net income to that person is reported
on Schedule C. (The treatment of the other
band members' income is either wage income,
deducting their individual road expenses on
schedule 2106, or business income, deducting
it on THEIR Schedule C's.)

I think you (or the band) needs a tax accountant
this year. (From what I know of bands, you may
need someone in the financial business to keep
track of the money coming in and going out --
$500 a week per player may end up NOT being
profitable.)
 
P

Paul A Thomas

Judith Marrs said:
If a person were to have a band that made around $500 a week per player,
should he consider it a business and pay taxes quarterly or just consider it
a band and pay at the end of the year, deducting road expenses.
It's definitely income that needs to be reported, as well as
the ordinary and necessary expenses of operating the
business. Bands, musicians, artists and entertainers have
some quite uncommon expenses. See if there are any CPA's or
EA's in your area that deal with bands and musicians as they
would be most familiar with the intricacies of the types of
things that are deductible.

Also, the issue of merchandise comes up. Sales tax is more
than likely due on those sales. The purchase of merchandise
(t-shirts, etc) are not deducted until sold. Also, sound
recordings (basically his studio recording costs) are a
Section 197 intangible asset and are, or can be, amortized
(expensed) over 15 years.

There may also be multi state tax issues to be addressed,
and a professional can help you determine the need.
 
E

ed

Judith Marrs said:
If a person were to have a band that made around $500 a week per player,
should he consider it a business and pay taxes quarterly or just consider it
a band and pay at the end of the year, deducting road expenses.
Yes, it's a business, or are there special rules for bands?.
You only have to pay, in equal and on time quarterly
payments as much as your last year's tax in order to avoid
any underpayment penalty, then pay the remqainder you owe
next April wiith your return. You will owe SE taxes also.

ed
 
C

Christopher Green

Judith Marrs said:
If a person were to have a band that made around $500 a week per player,
should he consider it a business and pay taxes quarterly or just consider it
a band and pay at the end of the year, deducting road expenses.
At that level of income (if you have a band that makes a
steady $500/week each, lucky you!), you pretty clearly have
a business. You will also need to consider how to organize
the business: a limited liability company (LLC) is currently
fashionable for something that in earlier days would have
been a general partnership.

Whether this mean you pay quarterly estimated taxes depends
on your total tax burden and whether you have enough
withholding taken at your day job to cover most of that.

The basic rule is, you pay 90% of your total tax for the
year (or your total tax less $1,000) through withholding or
estimated tax payments to avoid interest and penalties.

Don't forget to consider self-employment tax on your band
income. This can be substantial.
 
G

Gene E. Utterback, EA

Judith Marrs said:
If a person were to have a band that made around $500 a week
per player, should he consider it a business and pay taxes
quarterly or just consider it a band and pay at the end of
the year, deducting road expenses.
Yes.

Gene E. Utterback, EA
 
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M

Missy Doyle

Judith Marrs said:
If a person were to have a band that made around $500 a week per player,
should he consider it a business and pay taxes quarterly or just consider it
a band and pay at the end of the year, deducting road expenses.
The best thing for you to do is to hire a tax professional.

Missy Doyle
 

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