One of the best parts of taking your passion project to the next level and treating it as a business is that you are able to take advantages of the tax write off that goes into running your business. Yet many new entrepreneur-musicians struggle to fully benefit from this. Especially shocking given the equipment that goes into production is one of the largest cost to your business. Write that new mixer off baby!
For full time and committed part-time musicians, the first mistake comes in not having a business structure to hold the value brought in by way various capital via equipment and expertise. The tax structure for taking these large purchases on is better suited as a business expense in which you can legally deduct during tax time. This is only the beginnging. Travel taken to various shows are rarely written off!
It’s said that the only two certainties in life are death and taxes. Although it’s true that everyone can expect to pay taxes in some form or another during their lifetimes, within the framework of our tax system, there still are a lot of uncertainties. For example, depending on how you crunch the numbers, the average federal tax paid by an American household is either about $9,600 or about $14,600. There’s a lot of variance among tax filings. Yours may be significantly different, depending on the steps you take when filing. Many Americans file their taxes without taking all of the deductions and credits to which they are entitled. As a result, they may pay much more in taxes than necessary.
Everyone’s situation is unique. With the recent tax reform bill that was just signed into law, the tax structure is much different today than it was a year ago. That means, it’s extremely important for individuals filing taxes to seek expert advice from experienced and knowledgeable tax professionals in their area. In general, however, there are many details that the average taxpayer may not remember to do when filing his or her taxes that may result in lower tax bills or larger refunds.
For example, most American taxpayers don’t claim all possible exemptions and credits. These may include child-related tax credits. Other actions that could have a positive impact on your tax bill include participating in a flex spending account, planning for retirement savings or participating in education savings plans. Simply by remembering to look for these items and including them in your tax return filing, you could save yourself a significant amount of money. When preparing your tax return for 2018, remember these and other tips and strategies for reducing your tax burden found in the checklist below. Combined with expert advice from seasoned tax professionals, your next tax return may be much less painful than last year’s. Paying taxes may be unavoidable, but that doesn’t mean you shouldn’t do all you can to save the most money the next time you pay.