Tax Time and Writing Off Records/DJ Expenses

[ao125]

One VERY important thing to keep in mind when trying to write off records, turntables, needles, etc. on your taxes is that your MUST be able to show some income, or else they can not be written off... so anyone getting paid "under the table" by club/bar owners can't write these things off... unless of course the club/bar wants to start backing you up.

However, you can save your recipts from this year and write them off next year. Technically the assets are not "consumed" until they are proven used... so building a record collection in 2002 and 2003 can be written off in 2004 once you show income... same goes for hobbies.

I just got off a very long and drawn-out phone call with my accountant who dashed every single hope I had of writing off about 700 in records this year.

:owned:

just FYI.

[mattb]

Fuck taxes. I'm quite bitter about the amount that I OWE this year. bleah...

[rajdeep]

The Amtrak DJs essay by Krishna:

How to write your DJing off on your taxes
(http://www.amtrakdjs.org/essays/taxes.htm)

[rajdeep]

Technically you can classify DJing as a small business. However, to maintain this status for tax deduction purposes you cannot have more than 3 consecutive years of losses (expenses > income, even if income = 0). So, what they're saying is that after 3 years the business does not become profitable then it's a hobby and you can't take any more deductions.

As for the income bit, it becomes imperative that the 3rd year you show some profit thus be able to report any incomes, tips or wages received. However, anything earned above $400 is taxable though.

[Gizmo]

I was just about to ask the likelihood of me writing off my college book expenses and getting anything back for it...

paying for school sucks.

[Wickity]

It's not true. You can go for about 2 years without any income. As long as you are able to show that you are in fact pursuing it as a money making hobby, then you don't actually need to show income or a profit.

[ao125]

Originally posted by rajdeep
The Amtrak DJs essay by Krishna:

How to write your DJing off on your taxes
(http://www.amtrakdjs.org/essays/taxes.htm)

I actually gave that to my accountant (http://www.kwccpa.com) with a huge stack of recipts and it got me all of nowhere.

[rajdeep]

Do it yourself. I did the same and believe me it helps you in planning for the coming year. It does involve a lot of references etc. but it's worth the education.

[rajdeep]

Originally posted by Gizmo
I was just about to ask the likelihood of me writing off my college book expenses and getting anything back for it...

paying for school sucks.
You should research a bit if you itemize your deductions. There maybe cases which apply to you e.g. returning to school, classes taken to aid in seeking a better job etc.

Even if you may not have met the requisite criteria for this year, it will help you plan for the coming year.

:thumbsup:

[ao125]

Is there time to list myself as self-employed (non-w2) on this year's taxes or is it a moot point until next year?

[rajdeep]

Depends on your state of residence. MD allows you to register your business sometime through April.

http://www.choosemaryland.org/business/starting/index.asp

[Wickity]

And you don't need to register anything if it's just a money making hobby.

[rajdeep]

Well, then you can't take deductions! :D

[Wickity]

Yes you can... That exactly how my accountant did it last year. You can net out your income vs. expenses, and take that as either income or a deduction. No business required, you're just allowed to do that. You can only have 2 "money making" hobbies in any given year though. that's it.

[rajdeep]

I'm pretty sure if you classify DJing as a hobby you can't take any deductions.

The deductions have been provided to incentivize small businesses. Thus, they expect you to make a profit after a certain period and once you get paid $400 and above start paying taxes on those wages. I'ts not really a free ride as it may seem.

[ao125]

Well, technically I didn't make any money because the space I/we play at kinda pays in cash with no recipts.

[ao125]

You can take deductions for hobbies *if* they make money.

[Matt Sanborn]

wait-

my accountant told me I have to be a working dj-as in getting paid.

fine by me, unfortunately annually djing brings in more than 400 so it gets taxed

Raj and wickity wrote off rekkids? Yall getting paid to dj??

How did you do this?

[Wickity]

yeah, i get a cople of dollars here and there. believe me, getting paid cash does not mean that you can't report the income.

I you get paid under the table, then you get no deductions, but I'm absolutely disgusting about doing the moral thing. I report every dollar that comes in. However, on the flip side, I deduct absolutely every expense I'm allowed.

If you guys want my accountant's number, I'll be more than happy to set you up. He's a real cool guy. Great big fat man who works out of his house. :raveon:

Send me a PM, he's totally legit too, in case there's any concern. :wink:

[rajdeep]

Matt, records are considered part of the cost to do business, as are CDs, labels, any equipment etc. I can write them off w/o any income for the 1st 2 years, in the 3rd year I'd better start getting paid else my "small business" is more of a hobby.

[ao125]

From the acountant:

"The 3 year rule is arbitrary. The IRS however will use this rule and reclassify a business to a hobby with all the related bad tax implications. They also can come in in the first year and have you prove that you had a profit motive for the enterprise. If the IRS determines you have a hobby, they will go back and reclassify any open earlier year returns. It is not correct that you are safe for 3 years."

[Wickity]

Yes, if you continue to only report losses, then they will review your returns... If you've done anything shady, it could come back to bite you.

[the sex molesters]

even if you are being paid under the table, you just have to claim the income on your taxes.

[jakesmitty007]

Create an offshore shell corporation based in Bermuda and funnel your profits through it so you don't have to pay taxes! And it's perfectly legal too!

[Christine]

Bumping this timely thread...

[ramz]

I was pissed because I had thousands of dollars of stuff that I wanted to write off in equipment and records, etc. and had some reportable income, but apparently I make too much at my real job to have it make a difference... grr... I eventually just ripped the entire section out of my 1040A so that I wouldn't have to worry about raising audit red flags...

[Bioteknik]

well I do my taxes myself.. and turbotax would only deduct your expenses from djing from your income you made djing.. I'd be worried about an audit if I tried to deduct the income from my day job from my djing expenses.. and turbotax won't even let you do that anyways.

[PYVND]

Matt, records are considered part of the cost to do business, as are CDs, labels, any equipment etc. I can write them off w/o any income for the 1st 2 years, in the 3rd year I'd better start getting paid else my "small business" is more of a hobby.

This is true. And if you are claiming hobby, you can only claim as much in expenses, as you bring in on income.

Another way may be to go through all of your records and donate the ones you no longer want (and you feel others would not want to take off your hands). This area is too rich to care, but in some parts of the country, those goodwill stores are a major source of people's shopping. And you get the tax write-off of course.