What do i have to do on taxes for playing guitar in a restaurant?

Question

I'm 16 and i recently got my first job playing guitar at a restaurant a few nights a week. The restaurant is paying me 15 dollars an hour and i make quite a bit in tips (more than the restaurant pays). I know that i'm gonna have to pay tax on what the restaurant pays me but i was wondering about the tips. Also, is there any way that when i buy some music equipment i can write it off on my taxes as a business expense? Please don't respond unless you really know what you're talking about. thanks

Answer 1

I'm a musician, and it's simple. Just keep a ledger of your earnings. And be faithful about it. Also, keep a file for all of your receipts, ANYTHING you buy that enables you to become a better performer is going to be filed away in this file; music equipment, new strings, repair receipts, (if your guitar needs something done to it), gas receipts to and from your home, all the mileage you rack up driving from your HOME to your JOB, (a tax preparer will tell you what mileage is acceptable and what isn't) keep track of all of this. Also, I believe private lessons will fall under the "write-off" category, again, check with your tax professional. If you are required to dress a certain way, (clothes you might not wear anywhere else but to work), those receipts go in this file. Then when you file your taxes, you'll need to go to a tax preparer - you'll file a Schedule C form along with your federal and state. A tax preparer will want to see your tallies, not a box of receipts with nothing figured up, so be savvy and do some homework before you go. When you're self-employed you have to pay your own social security - which is a real CHUNK of tax. But - at least you're your own boss, right?

Answer 2

First off, is the business treating you as an employee or an independent contractor. That will mean a lot in the answer to this question.

If you are being treated as an employee, you will have to report your tips and the restaurant will withhold the correct amount of taxes based upon what you filed on your W-4. If you have enough other deductions to itemize, then you can write off any music equipment used while playing at the restaurant. These expenses would be considered unreimbursed employee expenses which must be greater than 2% of your adjusted gross income and reported on Form 2106 and possibly Form 4562. However, I doubt that you would be able to itemize your total deductions since you will need to have over $5350 in deductions before you can itemize.

If you are being treated as an indepenent contractor, you will need to report all business income and expenses on Schedule C. If you have greater than a $400 profit, then you need to fill out Schedule SE for self-employment taxes.

Answer 3

Tips are taxable just like the hourly amount the restaurant pays you. Keep close track of them, by each day that you work. If you are an employee of the restaurant, you should be reporting your tips to your boss. But whether they are having you do that or not, they are still taxable to you and you are responsible for tracking them.

You can deduct expenses from what you make - at least a portion of your equipment, all of the cost on items that you only use at the job.

Good luck.

Answer 4

First, I am going to assume that you are a dependent (probably of a parent). Next, I assume you have no investment income, like bank interest etc.

You are self-employed. You will file a Schedule C and a Schedule SE. All of your income, both wages and tips, becomes your gross income. From this you can subtract expenses you had in doing your job. This includes transportation, supplies, phone charges, equipment purchases and repair.

The net after subtracting your expenses is what you will pay Social Security and Medicare taxes on. This is about 15% of your net income.

You will not owe income taxes until your net income is over $5,350 for 2007. But above that amount, you will owe income tax.

It would be easiest to get some software and put your information into it. Keep track of all of your expenses to minimize taxes you will owe.