Top Deductions for Producers to Claim on Their Taxes
Tax season has some major benefits for you, as a producer, because it can help keep money in your pockets if you know how to use the tax code to your advantage. We’re here to help you understand exactly how you can do that, but before anything, it’s worth explaining what a tax write-off is. If you’re not already familiar, a tax write-off is an expense. This could be a variety of things that you need to run and operate your business successfully. It can lower your taxable income from your business and require you to pay fewer taxes because you're investing this money back into your business. For example, if you made $50,000 for the year in your production business and you had $25,000 worth of qualifying tax write-offs, you would only be taxed on $25,000. Keep in mind, just because something is a tax write off doesn't mean you get to write off a hundred percent of it. Percentages may vary depending on what that particular item or service is and will ultimately be decided on by the IRS. Here are some of the top things that you could receive a tax deduction on when filing your taxes:
Music gear & rent:
If you've purchased MIDI controllers, computers, laptops, sound plugins, instruments, or anything else that you use to produce music, you can write it off. Also, if you are renting space or paying a mortgage for a studio, you can write it off because it’s an expense that you need to operate that studio. This can include utilities, internet, and whatever else you need in that studio to work from there. If you have a home studio, you can even write off the square footage of the space where you work.
Mileage & travel expenses:
If you travel a lot to the studio, the mileage back and forth from that studio can be a write off. As of January 2022, you can write off 58.5 cents per mile driven for business use. A good tip is to create a log that captures the number of miles driven, the starting and ending point of your trip, and the purpose of your trip. Once you file your taxes, just type in the mileage that you drove that entire year and it’ll be deducted. Tracking your miles is a good idea because they tend to add up over the course of the year with all the business meetings, marketing meetings, and/or music events you may be attending. You can write off the travel costs for attending these meetings and events. If you have to rent a car/hotel or get a plane ticket, you can write them off and lower your taxable income. Just make sure you keep proper documentation such as receipts and the purpose of the trip to do so.
What else can I write off?:
Business meals
Membership for any type of association or music-related company
Advertising
Freelancers who have done work for you
Your website
Audio, photo, and video apps
Office equipment
File sharing or cloud services
Cell phones (partial write off unless you use it exclusively for business)
As you make purchases throughout the year for your business, make sure you take a screenshot or a picture of the receipt for every purchase. This is for documentation purposes in the case of an audit where you have to prove that you bought something for the business. A good way to go about keeping all your receipts organized is by creating a folder in the photos app on your phone and saving all your pictures/screenshots there.
Please keep in mind that everything written in this article is solely for educational purposes and should not be taken as financial advice. We highly recommend consulting an accountant or tax professional to help you come up with a tax strategy that works for you and your production business.
