Musicians and the IRS

July 5, 2017
Robert V. Boeshaar

 Musicians and the Man

Seattle is one of the nation’s cornerstones for music, and with good reason. It’s the birthplace of wildly popular acts, such as Soundgarden, Alice in Chains, Ann and Nancy Wilson of Heart, Pearl Jam, Macklemore and countless other musicians. It is home to legendary guitarists Jimi Hendrix and Kurt Cobain. The Emerald City also hosts a large pool of rising stars, like Malady of the Sevendials, an all-teen, sibling dream-pop outfit. Seattle’s music scene is bursting with ineffable talent. With all that talent comes the responsibility of being right with the IRS so that a music act isn’t crippled with tax debt before it can achieve its success.

Solo Musicians

The IRS recognizes musicians who give private lessons, do session work in studios, or play solo gigs, as sole proprietors.  This means that they must file a Schedule C or Schedule C-EZ along with their Form 1040 tax return to declare any profits or losses from their business.

Though it may be tempting to try to avoid paying taxes for social security and Medicare, it’s still advisable to file Schedule SE, as lack of payments into the system impact the distributions one receives later in life.

A Cluster of Musicians

The IRS recognizes musicians who perform gigs together and share earnings and expenses as being part of a partnership.  As such, they will all need to file tax forms both as a group and individually.

The band’s first step to become tax compliant is to apply for an EIN, or Employer Identification Number.  This can be done on the IRS’s website and is fairly simple to do. The second step is to fill out a Form 1065 as a group and Schedule Ks as individual partners. The band must also file employment taxes if there are employees aside from its partners.

Finally, each musician has to file an individual Form 1040 with a Schedule E (list of individual profits/losses from the partnership) and the Schedule SE.

Being in good with “the man” may not be the rock ‘n roll way, but being in good standing with the IRS will help to keep you out of trouble and you will have one less thing to worry about.

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