Any Music Downloads - Royalty Free Music » Music » Can You Claim Musical Instruments on Taxes? Here’s All You Need to Know

Can You Claim Musical Instruments on Taxes? Here’s All You Need to Know

Claiming taxes on musical instruments

Can You Claim Musical Instruments on Taxes? Artists are known for their carefree and wild spirit. It’s why aspiring musicians often overlook the nitty-gritty details of the entertainment business. However, a small oversight can stir a storm if you’re not careful.

Therefore, it’s important to know everything about taxes, reportable income, and deductibles. Use this guide as a roadmap to navigate the confusing albeit an all-essential world of taxes as answer questions like:

  • Can you claim musical instruments on taxes?
  • Is your home recording studio part of the IRS scheme?
  • Are things different for bands?

Before deep-diving into these details, note that this blog is solely for general knowledge. One must always refer to an accredited expert for tailored solutions to resolve unique challenges. Now that we have cleared that out let’s learn about taxes.

The A, B, C of Tax Deductibles

The IRS (Internal Revenue Service) requests businesses and self-employed individuals to share complete income reports annually. Musicians aren’t excluded from this narrative. According to the governing agency, every penny you earn qualifies as income, regardless of its source. That means everything from your concert ticket sales, CD sales, Spotify/YouTube streams to revenues earned via small gigs count.

Fortunately, the price to pay for your profession isn’t too high. The IRS justly deducts some amount based on your expenses and depreciation claims.  

You can learn more about it below:

A. Are Your Music Instruments Eligible for Tax Deductions?

Yes, the IRS does permit tax deductions from your federal taxes whenever you purchase a new musical instrument for your professional pursuits. It’s a cost-effective privilege for artists that might need nine instruments to compose a masterpiece. You can benefit from this policy by filing the IRS Form 1040 Schedule C.

However, there are some terms and conditions associated with this advantage. One of them is that you can only reduce taxes for instruments bought over a specific tax year. That means the maintenance costs for older purchases are not part of this rule. Fortunately, there’s a workaround way to receive compensation for these expenses. We explain this in Part D of our checklist.

B. Business vs. Hobby: Pick Your Tax Profile

Despite popular belief, the IRS can hold you accountable for profits earned (more or less than $400) through leisure activities. Different variables influence tax rates for such endeavors.

Ask yourself:

  • Do you invest significant time and energy into your “music” hobby?
  • Does your livelihood depend on these musical performances?
  • Are you generating a passive income through the digital distribution of your content?
  • Do you frequently collaborate with independent artists and enterprises to earn money by sharing your original music?

If you said yes, the IRS would perceive you as a self-employed professional regardless of how much you earn or how short your paid gigs are for the matter.

Musical Note: Does your home office meet IRS requirements? Learn everything straight from the source by reviewing this official IRS guide about home office tax deductions.

C. When Can You Make a Depreciation Claim?

Woman playing a musical instrument

Musicians can make a depreciation claim on different expenses paid for creating, recording, editing, producing, and distributing music. Keeping an accurate record of these expenditures would be wise to ensure the IRS justly compensates you.

Depreciation claims apply to:

  • Musical instruments and home studio equipment bought and used for at least seven years
  • Any repairs and maintenance fee paid to fix worn-out instruments and equipment
  • Home studio furniture and electricity costs (i,e. For the square foot you utilize for business operations)
  • Transportation costs from home to external recording studios

The IRS decides a depreciation percentage for each item in this list.  For instance, your violin might depreciate at a rate of 5% each year, while other types of equipment have a higher (or lower) rate.

Musical Note: Watch this video to learn how you can claim musical instruments on taxes along with other expenses.

The Changing Point: Do the Same Rules Apply for a Band?

It all depends on how you present yourself on paper. Some bands single out one member and appoint them as the official taxpayer of the group. As a result, this individual has to fill out music-related income tax forms on behalf of the band. That means all taxes and expenses are traced back to you through the paper trail.

It can be inconvenient and messy. Therefore, some music groups either form a corporation or divide tax duties. For the latter, you divide expenses and report them in personal tax income forms. Both scenarios require you to consult a qualified tax professional. Otherwise, you might be convicted of tax fraud.

Let’s Crunch Those Numbers!

There you have it.

Preparing financial reports and paying taxes might sound dull and tedious. Yet, the hard work pays off through reasonable tax deductibles designated for musicians. It’s why you can make a claim when you purchase a new musical instrument.

That said, the answer to questions like “Can you claim musical instruments on taxes?” might vary from country to country. If you live in a different zip code, check official rules and regulations before making any claims. In this way, you can stay on the right side of the law while playing your tunes.

Until next time music folks!

Related Posts

How Much Does It Cost to Mix a Song? – Average Prices of Music Mixing

A Guide To Setting Up A Home Recording Studio

How Much Does a Song License Cost? – Here’s All You Need to Know

What Does DIM Mean in Music

How to Sell Original Music