Band Taxes

Discussion in 'Tax' started by Judith Marrs, Jul 21, 2004.

  1. Judith Marrs

    Judith Marrs Guest

    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!!!
     
    Judith Marrs, Jul 21, 2004
    #1
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  2. If a person were to have a band that made around $500
    It depends. See form 1040ES at www.irs.gov

    Helen, EA in PA
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    Helen P. OPlanick EA, Jul 23, 2004
    #2
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  3. $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.)
     
    Arthur L. Rubin, Jul 23, 2004
    #3
  4. 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.
     
    Paul A Thomas, Jul 23, 2004
    #4
  5. Judith Marrs

    ed Guest

    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
     
    ed, Jul 23, 2004
    #5
  6. 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.
     
    Christopher Green, Jul 23, 2004
    #6
  7. Yes.

    Gene E. Utterback, EA
     
    Gene E. Utterback, EA, Jul 23, 2004
    #7
  8. Judith Marrs

    Missy Doyle Guest

    The best thing for you to do is to hire a tax professional.

    Missy Doyle
     
    Missy Doyle, Jul 26, 2004
    #8
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