What! No whining?

It's TAX TIME and not a single moan or groan on the board. That has to mean that most didn't make enough to have to pay any OR you made so much that you didn't care OR (and most likely) you lied like hell on your tax return.

As a poor old retiree, I don't usually get hit with much of a tax bill, but this year I made a fatal mistake. I took a pretty hefty IRA distribution to help my then unemployed daughter (I paid off her mortgage) and pick up a small investment property. I had what I thought was a sure sale on a property I had on the market and was sure I'd be able to roll it back in within the allowed 60 days. Didn't happen. Result - distribution treated as ordinary income.

So what does this have to do with arrangers? Just this. I could have bought 4-5 AUDYAS with the check I just sent to the US Treasury Dept.

Oh well, beats going to jail...........I think.

chas

The man likes to play Nord; let's get him some Nords.


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Bo pen nyang.

Or with the price of the Audya you could have bought three S910's

Wrong prison!!!

This is the one...




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Bo pen nyang.

Chas, that's WHY you buy Audyas and other gear. You can write the whole thing off in one year. Beats sending it to Sam.
DonM

Don, you can't write off the cost of an Audya in one year. There are rules about capital equipment and dollar limits to the charge-off.
there are some choices to be made about the way equipment is charged off. Most people choose straight line depreciation over three years, but there are options. Sorry...


Russ

Chas-did the same thing. Helped a kid (mine) with a rehab. Had it sold, but financing fell through. Didn't make the 60 day payback.

Russ

Russ,

The Audya does not have to be categorized as capital equipment, therefore, it can be written off for a single tax year.

Tax time has never been a hassle for me, mainly because I keep meticulous records of my expenditures and income. For this I use Quicken and Quickbooks, both of which are outstanding programs for small business operators such as OMB entertainers. And, Quicken interfaces with Turbo-Tax, which makes life a lot easier when it comes time to file your return(s).

Turbo-Tax also has attached programs that provide you with tax rules, regulations, and guidelines about those deductions.

Books such as "Tax Loopholes--All The Law Allows" are extremely beneficial for finding additional deductions that would normally be overlooked by most bookkeepers and accountants. Last, but not least, be sure to put some money away for your eventual retirement. Depending upon your current age, the amount will vary from $3,500 to $5,000 that you can contribute. This will bring your adjusted gross income down by a considerable margin, thereby allowing you to not only pay less income tax, but additionally, have have a nest-egg if something catastrophic were to occur. ROTH IRAs are usually a good bet for this purpose.

Most full-time, musician/entertainers get to retire three days after they're dead, and the vast majority I know personally died flat broke. Most were pretty happy--but broke.

Good topic, Chas, especially this time of year.

Gary

Well, for 2009 we also made a LARGE 'contribution' to help pay off the national debt and help balance the State budget ...
For a variety of reasons - fortunately most of them were enjoyment - we also took considerable $$$ out of the 'portfolio' in 2009 ... the initial mistake we made was not to have taxes taken out ... now when we withdraw from the portfolio we have them calculate an estimated tax as well ...
Now to keep this thread 'arranger related', I also have one steady gig for which I get a 1099 and there is no tax taken out of there either ...
Our tax consultant has advised that we make a quarterly 'contribution' to Uncle Sam, but I'm thinking I will hold onto what I feel is mine as long as possible ... In fact, we had our taxes completed a while ago, but those checks aren't going out until tomorrow ...

And chas, I'm not going to whine because as I have often said "There are more people in this world who would want to trade places with me, than there are people I would want to trade places with" ... so I grin and bear it ...
t.

Gary, capital limits on my equipment purchases and depreciation are always a concern. I try to purchase the maximum number of collectible guitars my playing income will justify and depreciate them over three years.

The individual has some flexibility about whether to treat a purchase as an asset subject to depreciation or as a straight cost of doing business...like, say a power adapter. A little common sense is in order, to be safe. The rule is, if it is used as an income generating asset and has a useful life of over one year, it can be depreciated over the life of the asset.

A keyboard generally has a life of more than one year. I'd be really careful about treating the purchase of one used to generate income as anything but a depreciating asset. And, I'm careful to be realistic about the length of time I choose to take the depreciation. Plus, when the depreciated asset is sold, you have to pay capital gains on the difference between the "book" or depreciated value of the asset and the sale price.

I just called an associate...an attorney who worked for the IRS and who is now the area's top tax attorney and outlined the issue we're talking about. He confirmed that, during an audit, the question of useful life is what determines how an expense/depreciation decision is made. He also asked about the purchase price of the keyboard and the general annual income of a player. When I gave him my estimate, he said that those numbers would raise some flags if treated as an ordinary expense item and charged off in one year.

I depreciate ALL equipment purchases over $500.00 with a useful life of over one year.

For me, that's both the sound business decision and the right to do from an ethical standpoint. I'll take EVERY deduction I feel is legal, but that's where it stops.


Russ

Paying Tax is very important..

The more tax you pay the higher your income, and when i realise that, i would not mind paying $2.000.000 a year to the tax department.

Next to that paying Tax is almost as important for my country as public service. The more tax we pay, the more wellfare and prosperrity in my country... and that kills crime rates all over the place and creates save neighbourhoods where children can play outside without the risk of being shot by accident.

I play 40% income tax.. and 19% sales tax, so half of what i make goes back to my country... You say thats a lot, i say thats what makes this copuntry a great place to live. I don't mind paying Tax as long as it is invested smart intoo my country, as long as everyone gets free schooling and Free health care. As long as the roads and bridges are in excellent state.

But i hate when my government throws away money without thinking...


So paying Tax is a duty....

My ultimate goal in life is to pay $1-million in income tax for a single year. Yep, that's a lot of money, but it will have been one Hell of a year!

Cheers,

Gary

Bachus, what country do you live in where the government spends your tax dollars wisely. A lot of us would like to move there .

Seriously though, I wasn't expecting anyone to take this thread seriously but I'm seeing some great responses with a lot of them containing some valuable information. By all means, if you have some info to share that might benefit the average working pro, post it. For instance, in my situation, except for a few holiday gigs, I rarely play more than 1 4hr gig a week which barely pays for my equipment costs. I have not asked for nor received a 1099 because it's such a small amount. I don't even mention this (or any expenses associated with it) on a tax form. I figure it's more of a hassle than it's worth. Am I doing the right thing? I don't know. I think of it more as either a really poor paying job or a mildly expensive hobby.

chas

Yes Taike, I understand not a single guy has tried to escape.



chas

Chas, if you had received 1099's you'd have to deal with the issue and declare the income.

You didn't get one, which is strange. because that means the club you play(ed) for is on shaky ground claiming your compensation as a legit expense.

You and I have the same problem....expenses which, in the eyes of the IRS, exceed normal levels. And that's a problem. How DARE they accuse us of buying more equipment than we really need? (And, deducting it) (LOL).

Russ

[This message has been edited by captain Russ (edited 04-13-2010).]

Chas it's funny you mention taxes and the Audya as just this morning I was thinking how I could ever afford one. I thought maybe of taking some money out of my Roth IRA. For those tax experts out there here's my question. What is the penalty for early withdrawl? Is it 10% of what you withdraw? any other penalties?

There is no penalty for early withdrawal if you're 59 1/2, but there may be a penalty if the investment is something like a Roth IRA C/D. the penalty comes from the financial institution. If it would help, you can withdraw funds and replace them in under 60 days, with no penalty. There is also a 5 year rule. you need to leave the Roth in place for 5 years or pay taxes on the withdrawal, I believe. Just ask your banker or go on-line to IRS.gov.


R.

Yep--5 years of pay the taxes, plus some early withdrawal penalties. Like Russ said, check with your banker.

Gary

I was under the impression you could take your investment out of a Roth any time you wanted to after 5 years. Just the earnings you could not remove. But the money you actually put in you could. Is that wrong?

Taxes are pd, but had to use my wife's return to offset some of mine! And for the house: we have ours for sale, along with the 14 month market supply, plus the 144 new ones listed just yesterday.

You're right , Rory. you can take the principal out of a Roth.


Russ