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Income Tax Help For DJs

Deejay Z 10:59 PM - 31 January, 2008
Ive been looking all over for some info before I go into see the tax man. This is the first year that I had some serious "documented" cash come through the door.

The article I found was from March 2001 but it still seems pretty accurate

www.discjockey101.com

DJ's and Taxes

March 2001

April is tax filing time in the United States. For working DJ's, it's time to pull out receipts, W-2's, tax forms, and more. The following information is my opinion of how DJ's should approach taxes (verify everything with your accountant and/or the IRS).

To begin, you should determine your status as a performer. If you purchase music to play in your home studio and it's not a source of income, you're not a DJ (as the government views "occupation"). On the other hand, if you purchase music to perform at clubs that pay you, then you may be eligible to deduct the music expenses. In other words, determine your primary occupation. If you do not qualify for DJ services such as Promo Only, Hot Tracks and/or a record pool, you're most likely not considered a professional "working" DJ (as an occupation). On the other hand, if you're a Grammy-nominee like DJ Richard 'Humpty' Vission, then you have little to worry about.

If you have a full-time non-DJ related job and spin occasionally, then you may have to fill out a Schedule C "Net profit from a Business" to assess your profit and loss from spinning. The information from this form is then added to your 1040.

Resident DJ's should distinguish between "independent contractor" or W-2 employee. In other words, when you get paid, are taxes, social security, etc. deducted from your check(s)? If you're considered an "independent contractor," then you must fill out your taxes as if you operate your own business and fill out forms such as Schedule-C and the Self-Employment tax form. If you determine that spinning is a self-employed business, then you should also make quarterly social security payments and self-employment taxes.

Independent contractors have the advantage of writing off legitimate business expenses related to spinning (i.e., records, headphones, needles, etc.). Most mobile DJ's would benefit from this classification (i.e., they could possibly deduct travel expenses to and from mobile gigs). The disadvantages of being an independent contractor (i.e., non-W-2) include: (1) if you apply for a loan, you're self-employed status may make it harder to qualify; (2) an "independent contractor" may not be eligible to receive workman's compensation or unemployment insurance; (3) as stated above, independent contractors must make quarterly social security and self-employment taxes; (4) independent contractors must maintain detailed records of all their income and expenses. In contrast, W-2 employees receive a statement at the end of the year (which simplifies the paperwork).

Since many resident (W-2) DJ's purchase the music played at nightclubs (out-of-pocket), club owners save money on their entertainment budget. However, if a DJ spends more on music than s/he earns, then the jock could, in theory, lose money working as a DJ. Since this is not shown on the year-end W-2, the DJ could potentially be taxed on income that never materialized. Fortunately for today's DJ's, performing artists in the past confronted similar problems when it came time to file taxes. Perhaps this is why the IRS recognizes the "qualified performing artist" classification (this is why your occupation, as discussed above, is so important).

The IRS on Form 2106 defines a "qualified performing artist" as a person that:

(1) Performed services in the performing arts as an employee for at least two employers during the tax year;

(2) Received from at least two of those employers wages of $200 or more per employer;

(3) Had allowable business expenses attributable to the performing arts of more than 10% of gross income from the performing arts;

(4) Had adjusted gross income of $16,000 or less before deducting expenses as a performing artist.

As a "qualified performing artist," a DJ can deduct legitimate expenses from a W-2 job so long as the expenses are related to sustaining that income. The "QPA" deduction eliminates two problems (1) being taxed on income you didn't receive, and (2) being taxed twice -- on your income taxes and when you're taxed purchasing the music used to get your income. To deduct the expenses, as the IRS puts it:

if you were a qualified performing artist, include the part of the line 10 amount attributable to performing-arts-related expenses in the total on Form 1040, line 32. Write QPA and the amount in the space to the left of line 32 on Form 1040. Your performing- arts-related business expenses are deductible whether or not you itemize deductions.

If you bought new music, unless it was used as a predominant means of generating your income, you're not allowed to use it as a "QPA" deduction. In addition, you should save every DJ related receipt.

If the club reimburses you for an expense, that amount is the club's deduction and not yours.

For more information, visit the IRS Website or call the IRS at 1-800-829-4477 (available 24 hours a day until April 17, 2001). If you call, be sure to speak to a representative that is familiar with performing arts related taxes.
Big Phyll 2:59 AM - 1 February, 2008
Good look on the info.
Maskrider 1:56 PM - 1 February, 2008
Sticky on this
Releaux 2:50 PM - 1 February, 2008
Having run my own production/design/dj company for many years, I have one piece of advice to add to the above:

Unless you know the tax code as well as you know your music library, hire a Certified Public Accountant.

Tax filing with a good accountant generally costs around $350, but it's the cheapest money I spend every year, and I normally make the fee back in tax savings I wouldn't have known existed. In fact, the accountant's fee is generally deductible as well.

Here are a few things you can do to help the accountant (note, I'm in the US, so some of this may not apply to non-US folks):

1. Keep all of your receipts and organize them by category (meals, equipment, CDs, etc.) Separate by personal and business. One thing that can make this easier is to pick up a 12-month accordion folder at an office supply store.

2. Keep a written log of all your mileage, both personal and DJ related. You can pick up a log book at an office supply store for a few bucks. You can deduct nearly $.50/mile and that adds up fast. The key, though, is that you have to have a written log and it has to include all of the mileage on the car.

3. Open a separate bank account for all of your DJ-related income and expenses. This goes a long way toward making you look more legitimate in the eyes of the IRS, and makes the accountant's job a lot easier.

4. Get a new credit card dedicated to business expenses. If possible, try to get a "small business" credit card - you normally get a nice summary document at the end of the year to help with tax filing.

5. (Optional) Schedule a "pre-filing" appointment with a CPA in late November / early December. The primary advantage in doing this is you'll find out where you are financially and whether you should buy that new mixer in this tax year or next. It also makes the filing appointment go much more quickly since most of the work is already done.

6. (Optional - Advanced). Open an IRA. When self-employed, you qualify for some additional savings benefits. Your accountant can help you decide what plans might be right for you. For a great read on why you should be saving money, find and read the book, "The Wealthy Barber" (it'll be at your local library). It's an easy read and makes personal finance much more understandable.
djbriguy 5:40 PM - 1 February, 2008
this is a great thread.
Deejay Z 6:55 PM - 1 February, 2008
ya, I did some mad searching around and when in doubt turn to the SSL forum....
Lizandrooo 10:03 PM - 11 February, 2011
Thats nuts man, i had worked a small job last year for sales at a metropark store before becoming their regular saturday afternoon dj (3 saturdays out of the month) and im also getting GI BILL benefits (non taxable) and Reservist money for serving the navy and im making like under 10gs and i was supposed to get a 500 & somthin dollar return. then i punch in my the info of my 1099-MISC i received for djing @ metropark and the return amount dropped to 36 bux!!!! mang that sux. but yea i fall under the self employed statues :/ thx for droppin that knowledge, homie. im definately going to play my game differently this year.
WestCoastAvenger 10:42 PM - 11 February, 2011
Lizandrooo: You said you were a sales rep before they hired you as a dj, is that always the case??? every time i see that store in the weekends and see a dj spinning i always wonder how they got that gig.. i never wanted to ask the actual dj spinning at the store since i didn't want him to think i was there try to jack his gig..
Lizandrooo 11:02 PM - 11 February, 2011
Well i had to Network my way in like anyother gig but yea getting closer to the managers helps a ton. Which Metropark do u usually go to ?
WestCoastAvenger 11:50 PM - 11 February, 2011
the one in san francisco, CA or the one in San jose... i'll probably just hit up the manager and drop off a mix tape and see what they say..
Steve E Wunda 1:59 AM - 13 February, 2011
So for anyone who I do any work for independently should I ask them for a 1099-R form at the end of the year? What if they are unable to furnish me with one? Should I keep my own records and fill out the income forms for those that don't or won't give me the 1099?
Tinanevera 3:51 PM - 16 November, 2011
Hi, I was a full time DJ in 2001 and am now a full time practicing CPA. I am in the process of starting my own tax practice and specializing with DJ's. I will be taking clients for the next 2012 filing. I don't have the site up yet but can be reached at 408-307-3379 And can help with any tax questions especially for DJ's. Everyone seems to be on the right track however there is a way to avoid Self employment tax by opening up another business entity. Please let's chat and I'll post the new website when it is ready.
DJYoshi 4:35 PM - 16 November, 2011
spend $400 on your accountant... get $5,000 back from the IRS. #justsayin.
seriously though great thread for those that didn't already do the above.
Steve, you're only given a 1099 if your payout is $600 or more in the given year.

I honestly just suggest starting your own business if you're doing it.
1. you get extra tax breaks as a small business
2. if you dedicate a room or space in your house or apartment to your home office, you can claim against that on your taxes as well
3. it's just easier to keep track of 2 identities: yourself, your business
4. in case sh** hits the fan, you're not liable personally for anything... (huge advantage of corporation over anything else)
5. after you register your business, push your cell phone, office phone under the business name. build the credit up. register with Duns & Bradstreet. have them score your company credit...and you're good to go...
6. hire my sister as your lawyer on retainer... JUST SAYIN hahaha
MexiKanMan 7:24 PM - 26 February, 2012
We can all agree that most people are in the business to make money but if you're just starting a legit DJ business, especially MOBILE, you're gonna loose money the first couple of years, at least I did. My accountant told me that if I didn't make money this year (3rd) that the IRS would no longer consider this a business and just a hobby. That would mean I can't claim it anymore. I didn't have to worry about it because this is the first year I'm in the black.

Also, I went to my county clerks office and filled out a "Doing Business As" (DBA) form for two reasons: 1. to claim my business name and 2. to be able to cash checks written to that business name. When I went to my bank to file the DBA we created a new small business account. This account came with checks and a debit/credit card with that business' name on them.

It cost less than $30 to file and it will save you tons of time in asking clients to write checks out to "John Smith" or whatever. Any purchase you make can be tracked w/ your "new" bank account instead of having to sift thru all your personal bank transactions.
MexiKanMan 7:29 PM - 26 February, 2012
I also have all my receipts emailed to my DJ email account. In my folders, I label each by year, 2010, 2011, 2012 and I drag each receipt into that years folder. At the end of the year, I sit down for about an hour and enter each purchase in a spread sheet under Music, Equipment, Office, Income. I print out the receipts, spread sheet and sign and date it and give everything to my accountant.

If your new to the business, start saving receipts now, setting up a system of tracking your expenses and income and at the end of the year, you'll save yourself tons of time. Hope this helps?
CheAlvarado 4:20 PM - 13 April, 2012
Maybe this has been said, but if your a Resident DJ and get a 1099-misc at the end of the year. Can you write off a vehicle you purchased for the moving of equipment every week in and out of the club?
DVDjHardy 4:34 PM - 13 April, 2012
Yeah. But you can only write-off a percentage if you use it for personal use too.
Logisticalstyles 4:48 PM - 13 April, 2012
And you have to keep very good records of your mileage if you want to claim that car.
djpuma_gemini 4:50 PM - 13 April, 2012
Quickbooks is your friend.
I started using it for this year and luckily turobtax helped for my taxes. It's still a pain, but got through it.
CheAlvarado 5:13 PM - 13 April, 2012
So mileage seems to be the key. Thank you for the information.
DJYoshi 8:28 PM - 19 April, 2012
gas, miles, anything business related can be considered an expense... gambling up to a certain amount in a casino can also be deducted. use an accountant for the future b/c tax laws change daily and when you pay them for their fees...they'll stand up with you should you be audited.
reggae delgado 8:34 PM - 19 April, 2012
Basically look at it this way: we all want to be treated like pros & always complain about newbies, free-jays & undercutters. We have long lists explaining why is it so much better to go with a pro instead of an amateur.

And then we turn around and try to do our own taxes when we can get a pro to do them for a couple hundred more (and save us a few THOUSANDS)!
DJ DisGrace 8:36 PM - 19 April, 2012
Quote:
gas, miles, anything business related can be considered an expense.

+1
late night after-bar food receipts!

Backin the vinyl days I alway got huge refunds!
DJ DisGrace 8:38 PM - 19 April, 2012
and don't forget office supplies, computer stuff, clothes (especially for the wedding djs), parking, car washes, business/lunch meetings, hotels when you stayed out of town... antyhing related to a gig is fair game for the most part
DJ SL1 8:05 PM - 3 February, 2017
Alright guys this is my first year trying to claim/ write off some of my expenses. Is turbo tax up to snuff on this stuff yet? I have a miscellaneous income form I got from a gig for a while and I have made a few bucks in other spots as well. No form for that though. Where would I fall in this mix?
Rebelguy 10:43 PM - 3 February, 2017
Quote:
Alright guys this is my first year trying to claim/ write off some of my expenses. Is turbo tax up to snuff on this stuff yet? I have a miscellaneous income form I got from a gig for a while and I have made a few bucks in other spots as well. No form for that though. Where would I fall in this mix?


How much was your 1099 form for?

If you got paid cash from the other events and they haven't sent you a form then it's up to you if you decide to claim it.

What are you trying to write off/claim?

Do you keep your DJ income in a separate account from your personal account?
DJ SL1 11:59 PM - 3 February, 2017
It was $2000.00 and the equipment was 2prx 15 and 2prx 18 and a ddjsx2 and plus maybe record pool subscription and other misc equip
Rebelguy 12:12 AM - 4 February, 2017
So you are only going to claim the $2000 on your taxes? That's an iffy one man. You are basically looking at a big loss for the year. If this is your first year filing then you will probably get away with it but as time progresses you will probably get audited.
DJ SL1 1:58 PM - 4 February, 2017
It is my first year and I did take a loss no lies here
Jef_Leppard 3:15 PM - 5 April, 2017
Here's a question. Say you hire others for DJ events. In my case, a photographer and also paying someone to construct stage props. Are you able to write off what you paid them? What about if you threw an event with another DJ and you pay the other guy a share of the money? Would that be considered an "expense" ?
DJ Guayo 3:23 PM - 5 April, 2017
It would be considered an expense, but you will have to issue them a 1099 of said services. At least that would be the 'cleanest' way in the eyes of the IRS. It basically comes down to how do you prove 'services'. Either a receipt, paid invoice, 1099 etc. I would still consult with a CPA to figure out the best way to claim this expense.
DJ GOODFOOT 3:09 AM - 6 April, 2017
You can claim a loss for three years, then have to show a profit.
MexiKanMan 3:04 PM - 7 April, 2017
Quote:
You can claim a loss for three years, then have to show a profit.


I've always heard that. If you don't show a profit after ____ years, the IRS considers it a Hobby and you can no longer claim the loss(es).

If you've been doing this for several years and shown a profit for ___ years, then have a down year, can you then claim a loss for that specific year, without it being an issue?
OGDJDoubleEdge 6:14 PM - 11 January, 2018
Yo @Deejay Z,
Even though you posted this 10 years back, (2008) it's still very a great post Bro 😎💪🏾✊🏽👍🏽

Thanks fam!


Quote:
Ive been looking all over for some info before I go into see the tax man. This is the first year that I had some serious "documented" cash come through the door.

The article I found was from March 2001 but it still seems pretty accurate

www.discjockey101.com

DJ's and Taxes

March 2001

April is tax filing time in the United States. For working DJ's, it's time to pull out receipts, W-2's, tax forms, and more. The following information is my opinion of how DJ's should approach taxes (verify everything with your accountant and/or the IRS).

To begin, you should determine your status as a performer. If you purchase music to play in your home studio and it's not a source of income, you're not a DJ (as the government views "occupation"). On the other hand, if you purchase music to perform at clubs that pay you, then you may be eligible to deduct the music expenses. In other words, determine your primary occupation. If you do not qualify for DJ services such as Promo Only, Hot Tracks and/or a record pool, you're most likely not considered a professional "working" DJ (as an occupation). On the other hand, if you're a Grammy-nominee like DJ Richard 'Humpty' Vission, then you have little to worry about.

If you have a full-time non-DJ related job and spin occasionally, then you may have to fill out a Schedule C "Net profit from a Business" to assess your profit and loss from spinning. The information from this form is then added to your 1040.

Resident DJ's should distinguish between "independent contractor" or W-2 employee. In other words, when you get paid, are taxes, social security, etc. deducted from your check(s)? If you're considered an "independent contractor," then you must fill out your taxes as if you operate your own business and fill out forms such as Schedule-C and the Self-Employment tax form. If you determine that spinning is a self-employed business, then you should also make quarterly social security payments and self-employment taxes.

Independent contractors have the advantage of writing off legitimate business expenses related to spinning (i.e., records, headphones, needles, etc.). Most mobile DJ's would benefit from this classification (i.e., they could possibly deduct travel expenses to and from mobile gigs). The disadvantages of being an independent contractor (i.e., non-W-2) include: (1) if you apply for a loan, you're self-employed status may make it harder to qualify; (2) an "independent contractor" may not be eligible to receive workman's compensation or unemployment insurance; (3) as stated above, independent contractors must make quarterly social security and self-employment taxes; (4) independent contractors must maintain detailed records of all their income and expenses. In contrast, W-2 employees receive a statement at the end of the year (which simplifies the paperwork).

Since many resident (W-2) DJ's purchase the music played at nightclubs (out-of-pocket), club owners save money on their entertainment budget. However, if a DJ spends more on music than s/he earns, then the jock could, in theory, lose money working as a DJ. Since this is not shown on the year-end W-2, the DJ could potentially be taxed on income that never materialized. Fortunately for today's DJ's, performing artists in the past confronted similar problems when it came time to file taxes. Perhaps this is why the IRS recognizes the "qualified performing artist" classification (this is why your occupation, as discussed above, is so important).

The IRS on Form 2106 defines a "qualified performing artist" as a person that:

(1) Performed services in the performing arts as an employee for at least two employers during the tax year;

(2) Received from at least two of those employers wages of $200 or more per employer;

(3) Had allowable business expenses attributable to the performing arts of more than 10% of gross income from the performing arts;

(4) Had adjusted gross income of $16,000 or less before deducting expenses as a performing artist.

As a "qualified performing artist," a DJ can deduct legitimate expenses from a W-2 job so long as the expenses are related to sustaining that income. The "QPA" deduction eliminates two problems (1) being taxed on income you didn't receive, and (2) being taxed twice -- on your income taxes and when you're taxed purchasing the music used to get your income. To deduct the expenses, as the IRS puts it:

if you were a qualified performing artist, include the part of the line 10 amount attributable to performing-arts-related expenses in the total on Form 1040, line 32. Write QPA and the amount in the space to the left of line 32 on Form 1040. Your performing- arts-related business expenses are deductible whether or not you itemize deductions.

If you bought new music, unless it was used as a predominant means of generating your income, you're not allowed to use it as a "QPA" deduction. In addition, you should save every DJ related receipt.

If the club reimburses you for an expense, that amount is the club's deduction and not yours.

For more information, visit the IRS Website or call the IRS at 1-800-829-4477 (available 24 hours a day until April 17, 2001). If you call, be sure to speak to a representative that is familiar with performing arts related taxes.
Deejay Z 10:27 PM - 21 April, 2018
All Day! Glad it has helped!

Quote:
Yo @Deejay Z,
Even though you posted this 10 years back, (2008) it's still very a great post Bro 😎💪🏾✊🏽👍🏽

Thanks fam!


Quote:
Ive been looking all over for some info before I go into see the tax man. This is the first year that I had some serious "documented" cash come through the door.

The article I found was from March 2001 but it still seems pretty accurate

www.discjockey101.com

DJ's and Taxes

March 2001

April is tax filing time in the United States. For working DJ's, it's time to pull out receipts, W-2's, tax forms, and more. The following information is my opinion of how DJ's should approach taxes (verify everything with your accountant and/or the IRS).

To begin, you should determine your status as a performer. If you purchase music to play in your home studio and it's not a source of income, you're not a DJ (as the government views "occupation"). On the other hand, if you purchase music to perform at clubs that pay you, then you may be eligible to deduct the music expenses. In other words, determine your primary occupation. If you do not qualify for DJ services such as Promo Only, Hot Tracks and/or a record pool, you're most likely not considered a professional "working" DJ (as an occupation). On the other hand, if you're a Grammy-nominee like DJ Richard 'Humpty' Vission, then you have little to worry about.

If you have a full-time non-DJ related job and spin occasionally, then you may have to fill out a Schedule C "Net profit from a Business" to assess your profit and loss from spinning. The information from this form is then added to your 1040.

Resident DJ's should distinguish between "independent contractor" or W-2 employee. In other words, when you get paid, are taxes, social security, etc. deducted from your check(s)? If you're considered an "independent contractor," then you must fill out your taxes as if you operate your own business and fill out forms such as Schedule-C and the Self-Employment tax form. If you determine that spinning is a self-employed business, then you should also make quarterly social security payments and self-employment taxes.

Independent contractors have the advantage of writing off legitimate business expenses related to spinning (i.e., records, headphones, needles, etc.). Most mobile DJ's would benefit from this classification (i.e., they could possibly deduct travel expenses to and from mobile gigs). The disadvantages of being an independent contractor (i.e., non-W-2) include: (1) if you apply for a loan, you're self-employed status may make it harder to qualify; (2) an "independent contractor" may not be eligible to receive workman's compensation or unemployment insurance; (3) as stated above, independent contractors must make quarterly social security and self-employment taxes; (4) independent contractors must maintain detailed records of all their income and expenses. In contrast, W-2 employees receive a statement at the end of the year (which simplifies the paperwork).

Since many resident (W-2) DJ's purchase the music played at nightclubs (out-of-pocket), club owners save money on their entertainment budget. However, if a DJ spends more on music than s/he earns, then the jock could, in theory, lose money working as a DJ. Since this is not shown on the year-end W-2, the DJ could potentially be taxed on income that never materialized. Fortunately for today's DJ's, performing artists in the past confronted similar problems when it came time to file taxes. Perhaps this is why the IRS recognizes the "qualified performing artist" classification (this is why your occupation, as discussed above, is so important).

The IRS on Form 2106 defines a "qualified performing artist" as a person that:

(1) Performed services in the performing arts as an employee for at least two employers during the tax year;

(2) Received from at least two of those employers wages of $200 or more per employer;

(3) Had allowable business expenses attributable to the performing arts of more than 10% of gross income from the performing arts;

(4) Had adjusted gross income of $16,000 or less before deducting expenses as a performing artist.

As a "qualified performing artist," a DJ can deduct legitimate expenses from a W-2 job so long as the expenses are related to sustaining that income. The "QPA" deduction eliminates two problems (1) being taxed on income you didn't receive, and (2) being taxed twice -- on your income taxes and when you're taxed purchasing the music used to get your income. To deduct the expenses, as the IRS puts it:

if you were a qualified performing artist, include the part of the line 10 amount attributable to performing-arts-related expenses in the total on Form 1040, line 32. Write QPA and the amount in the space to the left of line 32 on Form 1040. Your performing- arts-related business expenses are deductible whether or not you itemize deductions.

If you bought new music, unless it was used as a predominant means of generating your income, you're not allowed to use it as a "QPA" deduction. In addition, you should save every DJ related receipt.

If the club reimburses you for an expense, that amount is the club's deduction and not yours.

For more information, visit the IRS Website or call the IRS at 1-800-829-4477 (available 24 hours a day until April 17, 2001). If you call, be sure to speak to a representative that is familiar with performing arts related taxes.