IRS Tax Problem - Get Yourself A Tax Attorney

The very first thing you need to decide is whether music is your hobby or a business.

Please remember, I am not a tax professional so any suggestions I make are just that, suggestions. Not just in the long run, but also in the short term, getting a professional tax attorney to look at your affairs is really the only prudent course of action. Whether you are already making money with your music or intend to do so in the future, proper professional advice will save you time, money and headaches!

There is no doubt that you do it for pleasure but do you do it to make a living as well?

If for a living is the answer you will be able to set off money spent on instruments, equipment and other expenses in your tax return.

If hobby is the answer then you can only set off up to the amount earned from the hobby. The line between what is a hobby and what is a small business is somewhat blurred so this is one of the first areas in which you will need professional advice from a tax attorney.

If you have decided that yes, your music is indeed a business venture, you need to know that the IRS says "The music business... present(s) unique problems in an income tax audit." Translation: tread carefully. While you are entitled to deduct expenses from your business, you have to make sure to learn what you can and cannot claim, ensure that you report all your earnings from music and document everything.

Basic Tax Advice

• Treat it like a business and try to keep it to pure logic when assessing the numbers.

• Accurate tracking of income and expenditure is vital.

• Make sure to get a proper business license am by this a separate taxpayer ID number (TIN).

• Incorporate your band..

• Become a member of the relevant musicians organizations.

• Register with ASCAP, BMI or SECAC. This is how you will get paid your royalties from any public airing of your works.

For any forms you may require, the absolute best resource is actually the IRS web site itself.

What can you deduct?

Here is what the IRS themselves have to say on the subject of deductible expenses "To be deductible, a business expense must be both ordinary and necessary. An ordinary expense is one that is common and accepted in your trade or business. A necessary expense is one that is helpful and appropriate for your trade or business."

Once you have spent money in conjunction with running your business, you should be able to deduct these expenses from your tax returns.

Apart from the obvious areas of instruments, equipment and professional business fees, there are any number of areas of expenditure pertaining to your business that may or may not be deductible such as:

hear are some areas of potential expenses you might look at:

• Music business books and directories

• Trade magazines (such as Billboard and CMJ))

• CD/tape duplication for promotional purposes

• Office supplies

• money spent on setting up and maintaining your web site.

• Rent for storing your gear and for your practice space

• Membership in professional organizations, associations & unions

• Travel expenses

it is generally accepted that self-employed people tend to be more at risk of an audit, so keeping good records and having a professional tax attorney on your side is really the only sensible way to work in this area.

Dealing with the IRS is a responsibility but it need not be a headache so deal with it now before it turns into one. Find yourself a tax professional today and save yourself a lot of of money and headaches in the future.