Chip McDonald Posted April 14, 2001 Share Posted April 14, 2001 Thank you. Any last minutes tips from any experts on helping a self-employed guitar teacher that makes borderline poverty level income? http://www.mp3.com/chipmcdonald Guitar Lessons in Augusta Georgia: www.chipmcdonald.com Eccentric blog: https://chipmcdonaldblog.blogspot.com/ / "big ass windbag" - Bruce Swedien Link to comment Share on other sites More sharing options...
alphajerk Posted April 14, 2001 Share Posted April 14, 2001 save all your reciepts alphajerk FATcompilation "if god is truly just, i tremble for the fate of my country" -thomas jefferson Link to comment Share on other sites More sharing options...
spookmuzik Posted April 14, 2001 Share Posted April 14, 2001 depreciate anything you can call business equipment Keepin it Reel to Reel http://www.dusty45s.com/ Link to comment Share on other sites More sharing options...
D. Gauss Posted April 14, 2001 Share Posted April 14, 2001 get a good accountant. the 300 bucks or whatever you pay them will bring you ten-fold in tax savings. remember that your "business" can lose money for 5 years in a row before it becomes subject to scrutiny. i'm sure you've thought of these already, but consider the following deduction/write-offs: -strings, guitar set-ups, etc.-cd's (students want to learn tune ___ )-cable tv (students want to learn the mtv song _____ )- x% of your rent/mortgage if you teach at home- ditto utilities-magazine subscriptions (can't teach without guitar player....)-internet connection (you need to post lessons online for students)-ditto computer costs and printer to print out tab/charts-hookers (so your students get the "feel" of being a true rock star.... d. gauss Link to comment Share on other sites More sharing options...
Dan Richards Posted April 14, 2001 Share Posted April 14, 2001 What d gauss said. And I'll add; don't be such an irresponsible businessman by waiting until the last second. Decent tax accountants are busy. Mine hasn't even been accepting calls for the last month. The IRS doesn't suck, it can really help the self-employed businessman. Your attitude sucks. : ) I already filed my taxes awhile ago. I'll be getting back about $6700 from Uncle Sam. I had over $25K worth of write-offs in 2000. Dan Richards Pro Studio Reviews Link to comment Share on other sites More sharing options...
alphajerk Posted April 14, 2001 Share Posted April 14, 2001 "cable tv (students want to learn the mtv song _____ )" i can just see explaining this one in an audit http://www.musicplayer.com/ubb/biggrin.gif im rolling. alphajerk FATcompilation "if god is truly just, i tremble for the fate of my country" -thomas jefferson Link to comment Share on other sites More sharing options...
Chip McDonald Posted April 14, 2001 Author Share Posted April 14, 2001 Originally posted by d gauss: -cable tv (students want to learn the mtv song _____ ) See, things like that I get paranoid about.....? -magazine subscriptions (can't teach without guitar player....) Yeah... -internet connection (you need to post lessons online for students) Paranoid again... -ditto computer costs and printer to print out tab/charts Paranoid... -hookers (so your students get the "feel" of being a true rock star.... Ahh, uhmm.. "ok".... This message has been edited by Chip McDonald on 04-14-2001 at 10:04 PM Guitar Lessons in Augusta Georgia: www.chipmcdonald.com Eccentric blog: https://chipmcdonaldblog.blogspot.com/ / "big ass windbag" - Bruce Swedien Link to comment Share on other sites More sharing options...
Chip McDonald Posted April 14, 2001 Author Share Posted April 14, 2001 Originally posted by teller: The IRS doesn't suck, it can really help the self-employed businessman. Your attitude sucks. : ) Let's see... the IRS is an obfuscated government organization that redistributes a large portion of my income in ways that I have no direct control over, takes a ton of my money for "social security" at a poor return that I'll probably never see, but it can really help the self-employed business man? BS I already filed my taxes awhile ago. I'll be getting back about $6700 from Uncle Sam. I had over $25K worth of write-offs in 2000. You write off basically twice as much as I make. I guess you *don't* mind the IRS as much as I do. http://www.mp3.com/chipmcdonald Guitar Lessons in Augusta Georgia: www.chipmcdonald.com Eccentric blog: https://chipmcdonaldblog.blogspot.com/ / "big ass windbag" - Bruce Swedien Link to comment Share on other sites More sharing options...
Tedster Posted April 14, 2001 Share Posted April 14, 2001 >>I already filed my taxes awhile ago. I'll be getting back about $6700 from Uncle Sam. I had over $25K worth of write-offs in 2000. >>You write off basically twice as much as I make. I guess you *don't* mind the IRS as much as I do. Hehehehe...perhaps some "creative padding" might help...it'd be cool if you could do like what Uncle Sam does...$200 for a screwdriver... Set of strings...$200Music Stand......$450Blank tab book...$150 Hahaha...of course, it'd guarantee you free meals and a place to sleep for a few years...as well as learning a valuable trade, like making license plates, but details...details... "Cisco Kid, was a friend of mine" Link to comment Share on other sites More sharing options...
Guest Room Warrior Posted April 15, 2001 Share Posted April 15, 2001 The "lose money for five years" thing isn't a real rule, or even an IRS guideline. It's folk wisdom, and as such should be taken with a grain of salt. The IRS can recognize a "hobby business" a lot faster than 5 years, I can assure you. teller - no sarcasm here, but in all seriousness, if your accountant let the government borrow $6,700 from you for a year interest free, you need a new accountant. The object of the tax planning game is to come out as close to even at the end of the year as possible. - Jim Bordner Jim Bordner Gravity Music "Tunes so heavy, there oughta be a law." Link to comment Share on other sites More sharing options...
Dan Richards Posted April 15, 2001 Share Posted April 15, 2001 Guest, that was from joint filing with my wife that included periods of full-time employment, contract work and a partnership business. Chip, you probaly would owe zero taxes, so what are you complaing about? I'm sure you take in a lot of cash that you don't have to even report, right? Dan Richards Pro Studio Reviews Link to comment Share on other sites More sharing options...
ricknbokker Posted April 15, 2001 Share Posted April 15, 2001 Oy Vey!!! The IRS doesn't suck??!!! Have you ever seen the tax code? What a waste of trees. Anybody who came up with that thing MUST suck! Some truths: 1.- The sky is blue. (at least, it LOOKS blue) 2.- We all die. (after paying taxes most of our lives) 3.- John Tesh sucks. 4.- The IRS sucks. (if the had theme music, Tesh would write it. Linda Macartny on vocals) Yes, I WAS audited once. Forgot about an extra income of $664. Got me 5 years later. Cost me $442 in fines and penalties. Link to comment Share on other sites More sharing options...
good morning Posted April 15, 2001 Share Posted April 15, 2001 The IRS executes the law that Congress writes. Try making sense of the law without explanation; it's not fun. Is the IRS zealous sometimes? Yes. But Congress in the last half-dozen years or so has been the one to rein it in. Maybe that's because of the republican takeover, or maybe it's because finally there have been enough horror stories of IRS abuse. Whatever. The labyrinthian tax code is a creation of Congress to redistribute wealth and feel good about doing it. It is their toy. If you have a complaint, write to your favorite senator or congressman in Washington. This message has been edited by swright50@excite.com on 04-15-2001 at 11:28 AM Link to comment Share on other sites More sharing options...
Guest Room Warrior Posted April 15, 2001 Share Posted April 15, 2001 teller - Ah, I see. I assumed you were talking about taxes exclusively on self-employment income. The year we started Gravity Music, my wife and I had both been working regular jobs and spent an amount on gear that went way over Section 179 limits for that year... so we got a similar "choke-a-horse" refund. Those days are long gone, I'll tell ya.... now that she is my partner in the business, our self-employment tax is enough to make you shed a tear (especially since I have little faith that we'll ever see any of that SS money. - Jim Bordner Jim Bordner Gravity Music "Tunes so heavy, there oughta be a law." Link to comment Share on other sites More sharing options...
GZsound Posted April 16, 2001 Share Posted April 16, 2001 Yes, the IRS sucks..however, since you have to play the game do it smart as suggested. Save all your receipts. Think about what you spend for your business. Business cards, magazines, supplies, flyers, advertisements, business meals, business miles, etc. It's all legal to write off. And you depreciate your equipment as long as you can. I use business Visa, American Express, gas cards and any other business accounts I can get and let the business buy everything connected to the business. I also am a corporation which helps when you don't want to get a 1099 for your income. I don't claim a loss every year but by the time I get done, there isn't any income left to pay taxes on, it's all been disbursed.. ------------------Mark G. Mark G. "A man may fail many times, but he isn't a failure until he begins to blame others" -- John Burroughs "I consider ethics, as well as religion, as supplements to law in the government of man." -- Thomas Jefferson Link to comment Share on other sites More sharing options...
dansouth Posted April 16, 2001 Share Posted April 16, 2001 Chip, some potential ideas - - charge more for lessons- move to the big city where you can gig more and charge more for lessons- write some stories or articles for $$- write a hit tune with your new synth- do session work- teach at a school or other institution- consider a day job so you can give Uncle Sam MUCH more money next year Link to comment Share on other sites More sharing options...
strat0124 Posted April 16, 2001 Share Posted April 16, 2001 I keep receipts for every music store purchase, related or not. I keep a log book for mileage, gas receipts, whether rehearsal or gigs, and meals taken while "in harness". Plus if you give gear away to a charity or church it all counts. I just gave away 3500 bucks worth of video amps, switching units, and sattelite descrambling gear to a church....talk about a kicking deduction. I think there is a cap...don't know exactly what it is. Every little bit counts. Good luck. Down like a dollar comin up against a yen, doin pretty good for the shape I'm in Link to comment Share on other sites More sharing options...
Dan Richards Posted April 16, 2001 Share Posted April 16, 2001 Some wise words from GZ and others here. I mean, if you're a self-employed musician, the gov't will literally PAY for you to buy all the stuff you love, anyway. A business that's classified as a "multimedia production service" can almost get away with a lot of different kinds of "expenses". There is so much you can write-off. And like GZ said, if it looks like you've got some taxes to pay hello new piece of gear! The people who really get stiffed are the 9 - 5 "employed" working stiffs, but things are set up well to benefit the independent entrepreneur. And the IRS has drastically reduced the number of "drive-by" audits they do every year. Play by the rules, and you'll thrive. BTW, I just deposited a $1700 state tax refund check that came in the mail last Friday. : ) This message has been edited by teller on 04-16-2001 at 09:49 AM Dan Richards Pro Studio Reviews Link to comment Share on other sites More sharing options...
dansouth Posted April 16, 2001 Share Posted April 16, 2001 Originally posted by Guest Room Warrior: if your accountant let the government borrow $6,700 from you for a year interest free, you need a new accountant. I don't mind giving Uncle Sam a modest interest free loan. Interest rates are pitiful these days, and I can use that extra withholding to offset unexpected capital gains. Plus, it's pleasant to receive a lump sum at the end of the year, even if it's only from me. Link to comment Share on other sites More sharing options...
Guest Room Warrior Posted April 16, 2001 Share Posted April 16, 2001 I'd rather have the cash on hand during the tax year. It's a different story if you're writing off expenses for a hobby business (I don't know how many of you good folks are making a living solely as engineers/producers/what-have-you). But if you're making quarterly estimated payments as a sole proprietor, you want to pay the smallest possible amount (or get a very small refund) each April 15th. Jim Bordner Gravity Music "Tunes so heavy, there oughta be a law." Link to comment Share on other sites More sharing options...
Dan Richards Posted April 16, 2001 Share Posted April 16, 2001 dan, that's a good point about getting a decent lump sum all at once and one that's not involved with your "regular" pay. Even people who make decent money don't often get almost $7K in their hand all at once that isn't earmarked for something. Warrior, I use to file quarterly taxes, and every time I'd see how much I needed to pay out...that would just match [ by an amazing coincidence ] the amount of my next studio-related purchase. Hmm, should I send this $1500 off to Uncle Sam, or should I go pick up that ES 335 I've had my eye on? Jeez, sorry Uncle Sam, I had this $1500 all ready for you, and then BAM I was hit with a $1500 business expense. Sorry, maybe next time. : ) This message has been edited by teller on 04-16-2001 at 04:53 PM Dan Richards Pro Studio Reviews Link to comment Share on other sites More sharing options...
Guest Room Warrior Posted April 17, 2001 Share Posted April 17, 2001 dansouth - I can understand wanting to sock a little back against a windfall gig. teller - That 335 purchase comes off your business income on schedule C, not your total tax bill... it would reduce your liability by only a few hundred bucks (depending on your bracket and other deductions). Jim Bordner Gravity Music "Tunes so heavy, there oughta be a law." Link to comment Share on other sites More sharing options...
masternfool Posted April 17, 2001 Share Posted April 17, 2001 Originally posted by Chip McDonald: Thank you. Any last minutes tips from any experts on helping a self-employed guitar teacher that makes borderline poverty level income? http://www.mp3.com/chipmcdonald YES, cheat your ass off, The government will give that shit away as fast as they can take it from you...The Clintons DID...hb Link to comment Share on other sites More sharing options...
fantasticsound Posted April 17, 2001 Share Posted April 17, 2001 "-cable tv (students want to learn the mtv song _____ )- x% of your rent/mortgage if you teach at home- ditto utilities-internet connection (you need to post lessons online for students) d. gauss" A word to the wise.. everything d. gauss listed IS fair game as a guitar teacher, HOWEVER... If you want to write off part of your home expenses as business deductions you must: set aside a room SOLELY for teaching. It cannot even be used for storage of non-business items. Since I'm NOT a knowledgable accountant, I refer you to d. gauss's first point. Get a knowledgable accountant to work out this and the rest of your deductions. Otherwise you may end up audited and pay dearly in back taxes and penalties. P.S. Other musicians/engineers will give you good advice, but as Allan Sherman put it some 35 years ago: "Good advice costs nothing and it's.. worth the price!" Neil It's easiest to find me on Facebook. Neil Bergman Soundclick fntstcsnd Link to comment Share on other sites More sharing options...
GZsound Posted April 17, 2001 Share Posted April 17, 2001 Writing off a room in your home may not be such a good idea. Check with a tax professional. I was going to do that since my studio is in my basement but was advised not to do it if I planned on selling my home in the future. Something about adding the value back in or some such nonsense. Really, all the tax code does is keep a bunch of CPA's and tax attorneys working. I personally like the new 2001 form 1040EZ. Two lines on it: How much did you make last year?Send it in. ------------------Mark G. Mark G. "A man may fail many times, but he isn't a failure until he begins to blame others" -- John Burroughs "I consider ethics, as well as religion, as supplements to law in the government of man." -- Thomas Jefferson Link to comment Share on other sites More sharing options...
Anderton Posted April 17, 2001 Share Posted April 17, 2001 There is an article in the biz section on maximizing deductions. The home office deduction is sticky, as the definition changes a lot, based on the whim of congress. Adn it's true that it will bite you when you sell a house, but if you rent, it can make a big difference. Craig Anderton Educational site: http://www.craiganderton.org Music: http://www.youtube.com/thecraiganderton Twitter: http://www.twitter.com/craig_anderton Link to comment Share on other sites More sharing options...
Guest Room Warrior Posted April 18, 2001 Share Posted April 18, 2001 I think that maybe you guys are talking about two different things in when you talk about the potential problems of taking a home office deduction and later selling the house. The Home Office Deduction is a Fine, Good and Pleasant Thing, and should be taken advantage of to the furthest legal extent. It consists of adding up a portion of your mortgage interest, utilities, and other "consumables," and deducting them from your income (at a percentage that matches the percentage of home space you use for business). Yes, it has to be a legitimate home office (the IRS has been cracking down on doctors, lawyers and other professionals who were taking huge write-offs for home offices that were not their primary place of business). But for most of us in home studios, there's no contest. Most of the deduction has no effect when you sell the building. A small part of that Home Office deduction is depreciation of the house itself. This is the money that will have to be re-captured if and when you sell your home. And not all of that depreciation needs to be recaptured... just the portion you haven't "used" yet. The advantages of the Home Office deduction far outweigh the small recapture taxes you may pay when you sell. And if you think you might be selling in the next 3 to 5 years, just stop taking the depreciation portion of the deduction and you'll have no fear. I sold the house that I started my business in just three years ago, and the recapture was a drop in the bucket. As always, talk to a professional, but don't let the possibility of depreciation recapture keep you from snarfing up this 2nd best of all self-employment deductions (dead even with vehicle expenses, right behind my beloved Section 179). - Jim Bordner Jim Bordner Gravity Music "Tunes so heavy, there oughta be a law." Link to comment Share on other sites More sharing options...
Chip McDonald Posted April 18, 2001 Author Share Posted April 18, 2001 Originally posted by dansouth@yahoo.com: Chip, some potential ideas - - charge more for lessons I think I'm at the optimal point now; with the economy poised to fall again I don't dare raise it.... ahg. ove to the big city where you can gig more and charge more for lessons I wish that was an option. Atlanta is nearby but I don't have an in anywhere there - and Mars requires a degree.... not to mention the cost of living is greater - but the quality of life is probably much more interesting. Though I *was* moving to Florida for a while (I was looking forward to voting Jeb Bush out), but it didn't work out. Oh well. - write some stories or articles for $$ People say I should be a writer all the time, and I think I would be good at it - but "where to start"? - write a hit tune with your new synth Good idea (thanks again).... - do session work In my town - it's locked up. 2 guys have been doing (all of)it almost since I was born (34 years ago today.. Arg..). I like to morph into doing some jingle/commercial work, but it's a crapshoot time wise. - teach at a school or other institution I'm not "legitimate"; no piece of paper. - consider a day job so you can give Uncle Sam MUCH more money next year Not an option. I wouldn't be able to find a job as efficient pay/time wise... Thanks to everyone for tax version of KY...... ... what was with those stupid stick on labels you had to put on the envelope??!!?? Why is it that while people like the CEO of Shell oil have millions left over after taxes, but I'm scraping to get by afterwards - we're both "*equally* sharing the burden of paying for the government"? Tying that burden to a percentage of income is pretty clever. "The rich deserve not to pay as much because they're the most productive" - Robert Novak can (profane expletive laden description of a carnal act)! http://www.mp3.com/chipmcdonald Guitar Lessons in Augusta Georgia: www.chipmcdonald.com Eccentric blog: https://chipmcdonaldblog.blogspot.com/ / "big ass windbag" - Bruce Swedien Link to comment Share on other sites More sharing options...
Guest Room Warrior Posted April 18, 2001 Share Posted April 18, 2001 Chip - Don't discount the idea of doing session or commercial work just because there's competition. When I opened my shop, two shops here had all the bidness. One of them slowly became a sales-training agency and got out of the music business. The other got sloppy and handed me about 75% of my client list in the first year. SInce I opened, about three or four small shops have come and gone, a couple of them still hanging in quite effectively... but there's enough work for all of us. I've ended up specializing in some things that the other guys don't do very well, and they do a lot of work I don't even want, so we all find our level. And if those guys really do have the market locked up, you could do session work for them. But if you've got the chops, don't let 'em scare you: jump in! (Unless, of course, you're within a couple hundreds miles of me, in which case, you're right, we have the whole region in our pocket, you don't stand a chance, etc., etc...) http://www.musicplayer.com/ubb/smile.gif - Jim Bordner Jim Bordner Gravity Music "Tunes so heavy, there oughta be a law." Link to comment Share on other sites More sharing options...
Recommended Posts
Archived
This topic is now archived and is closed to further replies.