Can Musicians deduct their manager comissions and or lawyer fees from thier taxes?

Question

I've asked several different people and they all say different things. Can somebody give me a definitive aswer?

Ok let me clarify, my group is close signing a major deal. Looks like my cut after we pay taxes lawyers and all that isnt too great. However we are going to have to pay our manager a whoppin 60k plus in commission from the advance. My specific questions is can I deduct the amount I pay to manager as a comission from taxes as a business expense. Please say yes! hahaha

Ok but my taxes without any deductions would be about 33k, my portion of the manager and lawyer fees comes to 25k. This leaves me paying only 8k in taxes with an income of close to 100k. Call me paranoid, but thats just can't be right haha. Is it?...can u tell im scared of the IRS

Thanks everybody for your answers! I can't tell you the name of our band, becuase nobody really knows we're talking to majors. But I will let you guys know as soon as everything is final.

Answer 1

First you need to figure out if making music is your hobby or your business.That is, do you do it for pleasure, or to make a living? If it's a business, you can probably deduct the cost of your equipment and other expenses and fees on your tax return. If it's a hobby, you can only deduct only up to the amount of income you earned from the hobby.

If you spent money to run your music business, you should be able to deduct it from your income taxes. The IRS says in Publication 535: "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."

Here are some categories to think about (while keeping in mind that you'll have to separate business use from personal/pleasure use, at least in the eyes of the IRS):

* Instruments
* Equipment/gear & accessories (amps, pedals, effects, straps, carrying cases)
* Consumable supplies (such as drum skins & sticks, guitar strings & picks)
* Music business books, record company directories, venue directories
* Subscriptions to trade magazines (such as Billboard and CMJ))
* Sheet music and "How-To" books and manuals
* Promotional: CD/tape duplication (for demos), photos, bios
* Office supplies: paper, envelopes, photocopies, stamps
* Fees related to maintaining your website and e-mail access for your music-related activities
* Rent for storing your gear and for your practice space
* Membership in professional organizations, associations & unions
* Professional fees (attorney, manager, agent, accountant)
* Copyright and registration fees
* Lessons & instruction
* Travel expenses


If you're a performing artist, you can't take a home office deduction: For musicians, the principal place of employment is where the performance occurs, not the home practice area.

If you run a studio out of your home, or your principal business is not to perform but to record or sell your music otherwise (such as by the sale of CDs or tapes, or if you operate principally as a songwriter/jinglewriter), that rule may not apply.

Answer 2

My social ends in 01, and I was direct deposit, via Turbo Tax with the fees deducted from my return. I have not received any letters, nor show anything pending on my bank account. When I click on "Where's my Stimulus Payment?" I am told that they cannot track it and that I probably have entered information incorrectly. Well... that's impossible. I've also received varying information regarding the amount I am to get back. I only know that my child support is stuck in limbo somewhere and this is my fourth week without it. I am in dire need of my refund and I really hope it gets here soon. I cannot possibly wait until June.

Answer 3

Yes you can deduct your manager's expenses. There is nothing wrong with netting $8K as long as your expenses are legitimate & you have documentation.

Don't forget about all of your other expenses. It is acceptable to have a loss. Just watch that you don't have a loss for too many years, otherwise your activities could be considered a hobby instead of a business (& then a loss would not be allowed).

Good luck, what's the name of the group?

Answer 4

I would think that commissions and fees fall under the heading of business expenses, and as such some or all would be considered deductible. Do you have an accountant? They would know, and their fees would also be deductible. Also, it may matter if and how you are incorporated.

Answer 5

yes the managers commission is his income to have to pay taxes on,it would be a business deduction for you. same as lawyer fee ,it is an expense to your business.

Answer 6

The short answer is yes. There are some things for you to consider at this juncture as far as taxes go. Get yourself a reputable CPA.

Answer 7

commissions = income
expenses = tax

check w/ your local tax rep if concerned

Answer 8

Yes once they are paid

Answer 9

Yep. I don't file taxes for my music though. Too much of a hassle.