Each year, as the tax season approaches, Allegro publishes these updated tax tips provided by Local 802’s accounting firm, Gould, Kobrick & Schlapp P.C.

Overview and Highlights

The following outline focuses on aspects of the tax law that specifically affect musicians. For additional information on deductions, exemptions or filing status, see a tax advisor or www.irs.gov.

Here is a quick overview of some highlights for this tax year:

• The top four basic tax rates above 15 percent remain the same. (The rates are 25 percent, 28 percent, 33 percent and 35 percent.)
• The basic standard deduction is $5,450 for singles; $8,000 for heads of household; $10,900 for married filing jointly and $5,450 for married filing separately.
• The standard mileage rate for business use of your car is 50.5 cents per mile for the first half of the year and 58.5 cents for the second half of the year
• Wages and self-employment earnings of up to $102,000 are subject to the Social Security tax for 2008. (In 2007, this amount was $97,500.)
• The personal exemption amount was increased to $3,500 in 2008. (In 2007, this amount was $3,400.)
• For 2008 the maximum annual contribution to an IRA is $5,000, but a taxpayer age 50 or older can make an additional catch-up contribution of $1,000.
• A six-month automatic extension may be obtained by filing Form 4868 by April 15.
• In 2008, if the claimed value of a donated car exceeds $500, a qualifying written acknowledgment must be obtained and must be on form 1098-C and attached to Form 1040 or no deduction is allowed. If the charitable organization sells the vehicle without having put it to significant use or improving it, a deduction is limited to the gross proceeds from the sale, which must be reported in the acknowledgment.
• Taxpayers can deduct either state and local income taxes or state and local general sales taxes. The sales tax deduction is based on an IRS table or actual sales taxes. You should get the advice of your tax preparer when filing your return.
• Eligible individuals in 2008 covered by a high-deductible health plan can make deductible contributions to a Health Savings Account (HSA) up to the lesser of the plan deductible or $2,900 for self-only coverage or $5,800 for family coverage.

Income & Related Expenses

Professional musicians may have income from which tax has been withheld (W-2) or income from self-employment where neither tax nor Social Security has been deducted.

If the musician is self-employed, all allowable travel and other expenses should be deducted on Schedule C before the adjusted gross income is entered on page 1 of the tax return.

If the musician has only W-2 wages, these expenses must be deducted on Schedule A.

Reimbursements for expenses (e.g., travel and entertainment) received under an accountable plan do not show up on the musician’s Form W-2, are not reported as income, and do not give rise to deductions.

However, if the employee’s expenses exceed reimbursements, the excess may be claimed on Form 2106 as an employee business expense.

Generally, reimbursements are considered received under an accountable plan if:

• They are made for deductible business expenses;
• The employee accounts for the expenses to the employer; and
• The employee returns any excess reimbursement.

Reimbursements received under a non-accountable plan (any plan other than an accountable plan) are subject to withholding and employment taxes and are shown as wages on Form W-2 and must be reported as income on Form 1040.

The employee may be able to offset the extra income by claiming employee business expenses on Form 2106, but such expenses, along with other miscellaneous itemized deductions, may be claimed only to the extent they exceed 2 percent of adjusted gross income.

Travel Expenses

The deductibility of long-distance travel involving railroad or plane fares is fairly clear. The fares, plus related costs — such as taxis to or from the depot, baggage-handling charges and passports — are all deductible as travel expenses.

If you were away from home overnight, you may also deduct all of the following expenses: 50 percent of meals and entertainment; 100 percent of travel and lodging; laundry and cleaning; tips to bellhops and chambermaids; and transportation at destination.

Musicians may also use their own cars for business travel. The deductible items involved include: depreciation of the cost of the auto; gas, oil and tires; insurance, license and registration fees; parking expenses (e.g., garage rental or parking meters); parkway or bridge tolls. The point to remember in deducting auto expenses is that after you have totaled all of these costs, you must subtract that portion used for personal purposes.

The regulations call for an allocation based upon both time and mileage used, and this is often the most difficult part of the calculation.

An alternate method involves computing the amount of business mileage and then multiplying those miles driven by 50.5 cents (from Jan. 1, 2008 to June 30, 2008) or 58.5 cents (from July 1, 2008 to Dec. 31, 2008).

You may still deduct direct costs such as parking and tolls (but not depreciation, gas or oil).

The real problem in travel expenses is determining what portion of local travel (that is, not away from home overnight) is deductible.

In no case are personal meals deductible if the musician does not sleep away from home.

The regulations say that commuting costs are not deductible. This means that if the musician travels only from home to the hall and back again, the costs of travel are not deductible — even if the instruments are so bulky and heavy that it is impossible to use public transportation.

The costs of transporting instruments to and from work are deductible only if extra costs were incurred.

If you are playing more than one job during the day, you may use the business mileage formula described above for travel between jobs.

Again, except for any additional expenses, there is no auto deduction for travel to the first job or home from the last.

Job Expenses

Bills are required as proof for all job expense items exceeding $75 but there are many items of a lesser amount — such as tips and taxi fares — where no proof may be obtained.

Detailed records must be kept of these expenses (and of business mileage if a car is involved) through a careful diary or log. Keeping such records takes time and effort. If your return is ever examined, however, you could lose your entire deduction in the absence of a good log or diary.

Numerous other items are deductible by the professional musician. Among these are education expenses, accounting fees and fees for investment advice.

Education

With regard to education, you may take a deduction for any training or coaching that sharpens your present job or professional skills, or meets the expressed requirements of your employer for you to retain your job. You may also be able to deduct the cost of a course if you are entering a new specialty within the music field.

Other Expenses

Also deductible are employees’ expenses incurred in the practice of your profession.

In addition to the travel expenses discussed above, they include:

• Union dues, assessments and initiation fees;
• Commissions paid to agents and booking offices;
• Dues to other professional societies;
• Rehearsal hall, studio or office rental;
• Sheet music, transcriptions, arrangements, records, manuscript paper, etc.;
• Stationery, printing and postage used in business;
• Telephone used for business (a portion of your home phone may be deducted);
• The costs associated with your cell phone, as long as the calls are made for business purposes;
• Books and subscriptions to professional journals;
• Advertising and photographs for promotion;
• Other promotional expenses such as entertaining potential purchasers of music and gifts (not exceeding $25 per recipient);
• Repairs and upkeep of instruments;
• Insurance on instruments;
• Substitutes’ pay;
• Legal expenses for drawing up contracts of employment;
• Rental of instruments;
• Depreciation of instruments or recording equipment.

Self-employed musicians (those who use Schedule C) may take tax deductions for contributions made to formal pension or profit-sharing plans for themselves and their employees.

The procedures for this are quite complicated, and we advise that professional assistance be employed.

Note that two items — home office expenses and expenses for uniforms — were omitted from the above list. A word of caution is needed as to their deductibility.

Home Office Expenses

You may claim a deduction if you use your home office exclusively and regularly for the administration or management activities of your business, and you have no other fixed location where you conduct such activities.

Exclusive use means that the office space must not be used for personal purposes. And you may not deduct home office expenses in excess of your net income as a musician.

Expenses for Uniforms

The cost of uniforms and other apparel, including their cleaning, laundering and repair, is deductible only if the garments are specially required in order for you to keep your job and are not adaptable to general or continued wear, to the extent that they could replace your regular clothing.

You may not deduct the cost of ordinary clothes used as work clothes on the grounds that they get harder use than customary garments; that they are soiled after a day’s work and cannot be worn socially; or that they were purchased for your convenience to save wear and tear on your better clothes.

That your job requires you to wear expensive clothing is not, according to the IRS, a basis for deducting the cost of the clothes, if the clothing is suitable for wear off the job.

Deductions have been allowed to musicians for formal wear and the costs of theatrical clothing and accessories, if these items are not suitable for ordinary use.

Proceed with Caution!

A great deal of specific information appears in the booklet every taxpayer is sent with pre-addressed income tax forms.

If you have a complicated return or a particular tax problem, consult your own tax advisor or, if you prefer, contact one of the IRS taxpayer assistance sections at any of its offices.

From innerrhythm:

I had a request recently on how to write a music business plan. Here’s the format I recommend my clients to follow. Call it a template. A music business plan gives you a sense of leadership, strategy and direction and I discussed it briefly in my free e-book, How To Design A Winning And Profitable Music Business.

If you’re still not convinced on the importance of writing a music business plan for your career, here’s a very simple analogy: If I were to ask you to come to my home in London, I’d tell you the address and point you to Google Maps to get your directions from where you’re starting out. If you didn’t have those directions and my address, it’d be very difficult to get here without the map. Your business plan acts in the same way for your music career.

Whether you are a band, solo artist, songwriter, instrumentalist, producer, manager or any other music industry individual, you need a plan to help you achieve your goals and be fulfilled. The template below will help you create one. In helping to make this template real, I’m going to use a fictitious R&B/soul artist called Tina.

Music business plans can be created in many ways, but there are four core components that I like to advise people to write up: Operations (the activities you do in your music business), Marketing (how you’ll get those activities out to more people), Financials (how you’ll spend and make money) and Action (your time-line for getting things done).

Covering these four sections creates a very simple and excellent plan for your business. If you are looking to create a business plan that will help seek investment in your music business, you may need to go to more detail like analyzing your market, understanding your infrastructure, etc, but that is not the purpose of this article.

Read rest of the article…

Writing a Great Band or Artist Biography

A bio is the cement that holds your presentation together, creates your identity, brands your style and leads the reader directly to the music. Ideally, your bio should be applicable for multiple purposes: a key ingredient in your press kit, an essential element on the homepage of your website and as an easy introduction to bookers, journalists, fans and the music business at large. Music people are intuitive about press and publicity materials, and if a bio is non-existent, shoddy, poorly written, off-putting or amateurish, odds are the music it represents will share these same adverse qualities. Keep in mind that if you are using your bio to generate press, oft-times overworked and underpaid journalists with lift the exact phrases and words in your bio for articles and reviews.

Recording artists, songwriters, musicians, composers, performers and producers all benefit from having well tailored, professional bios. In this article MC advises your how to create an effective bio in reverse, by advising you what not to do.

1. Don’t tell, show. Beware the hackneyed cliché, the imprecise metaphor, and the goofy, strained adjective. “Joe Jones is a brilliant artist,” or “Sue Smith is destined for stardom,” are lame and off-putting. The bio must lead the reader to his own conclusions. Telling a reader what to feel or think may lead to the exact opposite impression.

2. Avoid the time machine. “She began playing piano at the tender age of four, and by age five….” Instant naptime. Begin your bio in the present, and then go back in time, but only so far as the story is fascinating. Beware dating yourself: if you’ve had an extensive career, you may want to be non-specific about years and simply summarize the main points and experiences.

3. “After a successful career in the marketing business, he decided to return to his first love, music.” Career choices that have nothing to do with music are needless distractions in a written bio. They may also illustrate a meandering, indecisive path. Music professionals don’t want to know how about your straight job. Do not include facts that don’t impact the music. For instance, it may be pertinent to say you ride horses if you have songs about horses, or have written songs while riding horses or can draw some correlation between horses and music. Otherwise, leave those horses in the pasture. Information about your educational background, work experience, broken marriage, prison term or dysfunctional childhood should be referenced only as it relates to your music.

4. Beware of grandiose comparisons. “Susie Stiletto combines the sensitivity of Joni Mitchell fused to the aggressive lyricism of Alanis Morissette, combined with the melodicism of Sheryl Crow.” This tells us nothing about the subject and she’d certainly need to be a mind-blowing, powerhouse artist to rank comparison to this triumvirate. Using others as reference points projects a “wannabe” status.

5. Be aware that certain tired phrases that will trigger the hype meter. “Eagerly anticipated,” “critically-acclaimed,” and “best kept secret” are three such onerous offenders. Other overused terms include “unique” (who isn’t?) and “passionate.”

6. Check all spellings and grammatical uses, especially if you’re planning on using your bio to solicit reviews or features in the press. Bad copy is galling to those whose livelihood is the written word. Keep your words in the “active tense” i.e. “John Smith incites his audience,” as opposed to the passive: “the audience is incited by John Smith.”

7. Exaggerating or outright lying. Being on the preliminary Grammy ballot does not deem you “Grammy-nominated.” Likewise, charts no one has ever heard of and awards with questionable luster will make you appear suspect and marginal.

8. Being generic and safe. Name and claim your musical style, and let the bio reflect the category. A seething, pierced, neo-punk aggregation and a soothing, cerebral instrumental artist can’t possibly share the same metaphors. Your bio must speak to the reader in the exact same voice as your music. Speaking of voices, interjecting direct quotes is a device that established artists have in their bios to lend immediacy and fire to the piece. Consider having your own words describe your music.

9. Too much verbiage is a turn-off. A one-page bio is standard length; a longer bio is fine only if your story warrants the additional pages. Otherwise, less is more.

10. Not keeping it current. Your bio, just like your pictures and the other elements in your press kit and website, need to be kept up to date.

11. Not keeping it to a standard format. Although you may be tempted to let your creativity run wild with stylized, fictionalized prose, it may be off-putting or confusing to your readers.

12. Don’t puff up your credits. For a new artist without significant history, it is preferable to emphasize elements of your personality, creative process, or an interesting fact about your upbringing or inspiration, but again, only if it relates to and is reflected in your music.

It you’re not comfortable as a writer, penning your own bio may be as frustrating and fruitless as trying to take your own pictures. Hiring a pro that understands the marketplace and your music is a worthwhile investment. Although you may be tempted to ask a friend with journalism experience to assist you, make sure that he or she can capture your music, and your individuality, in sparkling prose specific to music. Don’t be intimidated, and make sure the writer will be amenable to making changes, corrections and rewrites until you’re satisfied; it’s your bio.

About the Author: Dan Kimpel

Dan is the author of best selling music biz books, Electrify My Soul: Songwriters and the Spiritual Source (Cengage/PTR); How They Made it: True Stories of How Music’s Biggest Stars Went from Start to Stardom (Hal Leonard) and Networking Strategies For The New Music Business (ArtistPro/Thomson) the follow up to his best-selling title, Networking in the Music Business. Kimpel has penned over 200 bios for clients ranging from Grammy-Award winning producers to independent artists. For more on bios visit his website.

Source: MaxLowe.NET

Sitting down to write those first mind-racking band descriptions and introductions on your profile can be very hard. It involves a great deal of thinking, planning, and usually a lot of collaboration with the rest of the band, your friends and family members for ideas and the “right” thing to say. But, rather than worry excessively about what you want to say, you should consider what people want to read about your band.

New Fans and Innate Curiosity

When a new fan visits your site, they likely have three questions in mind:

• What kind of music do you play?
• What are you and the other band-members like?
• How does this affect me?

MySpace provides plenty of space and prompts for you to provide information about what kind of music you play and what kind of band you are. You can upload tracks for them to listen to, list your major influences, and create a series of mini-profiles with information about your band’s members. However, the third question is one of the most important and must be addressed carefully in the descriptions you write.

You might notice that many bands write a very long, involved profile discussing who they are, where they came from and what they see in their music. Other bands simply post a concert calendar and a short bio of 200 words. While a profile that is too long will simply bore readers, one that is too short does not address the question of “how it affects them.”

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From LatinoHiphop.Org

DIY or Do-It-Yourself is an artistic movement that transcends genres and mediums, which has become a state of mind increasingly adopted by creative types from around the world. The DIY acronym was first used by Punk Bands in the late 70’s, which out of the necessity to overcome a music industry that would not support their counter-culture began to organize themselves, creating their own record companies, concerts, and print media. This became known as the Do-It-Yourself (DIY) ethic. Now, nearly three decades later the DIY attitude has grown stronger than ever, embracing all forms of creative expression, in particular music, film and books.

A great resource for DIY information is the DIY Reporter which holds yearly DIY Conventions and Festivals around the nation.

How Do I ‘DIY’

1) Create a product to sell.
In our society, money is necessary for survival therefore artists need to find ways to generate income. Ideally, the first step in this process would be for artists to set up a legal entity (a company) to house their intellectual property. In order to reap the full protection and tax benefits of a company it is advisable to create a Corporation (Inc.) or Limited Liability Company (LLC). There are many online resources that will walk you through each step of this process and allow you to create your company without ever leaving your internet connection, my favorite being the Company Corporation. Next, your product needs to be prepared for sale. The creation of music whether it’s song writing, production or engineering is a very personal process and should be left to the discretion of the artist. I personally do a lot of my own recording on Logic Pro and for those based in D.C. I highly recommend the engineering of DJ Boom at Listen Vision. The presentation of your album should not be taken lightly, it is the one factor that can immediately let people know that you are serious, and even without ever having previously heard your music may entice someone to purchase it. A great resource for CD replication is Disc Makers, they will provide a top of the line, ready for retail album at reasonable rates in two weeks, start to finish.

2) Somewhere to sell your product.
Now that you have something to sell, you need somewhere to sell it. You will without a doubt sell your products at live performances but it is very necessary to create an online presence for yourself so people from all over the world can learn about you and yes, purchase your product. CDBaby was the first and is still the best at providing an online store. They give artists a place to sell their music online and still return 91% of the profits to the artist, they will sell your album and also help you place it on digital download sites like iTunes and Rhapsody. I also highly recommend that you create your own website. The process of creating your own website is three part; 1) purchasing a domain name 2) hosting the website 3) finding a design (template) that you manage or having someone design your website. GoDaddy is an excellent company for the first step of researching available domain names and purchasing and managing your address through them. The best company that I have found for hosting and allowing you to manage your own flash website without needing to have any knowledge of web design is Dynamod, I highly recommend their service.

3) Let the public know about your product.
In order for people to listen (and purchase) your music they need to know about it. Marketing, promotions and publicity are the cornerstone (along with hard work) of any successful business, without it, even the greatest song in the world would be lost to obscurity. There are many mediums through which you can let the world know about you, but there are three free resources that are great for promotions that I would like to refer you to; MySpace, YouTube and Email Lists. The popularity of Myspace has made it phenomenal for networking and making your music, shows and ideas available to a community of people that are highly receptive. YouTube is also an online community based site, which allows its users to upload short videos, giving it’s users a virtual Television Channel through which they can promote their music. Email lists take more work to gather but once people sign up for you list, whether through your website or in person at a show or networking event, you have a direct line to them which can be a powerful tool in promoting your performances and to yes, purchase your product. There are a few pay services, Vertical Response and Constant Contact in particular, which allow you to create custom newsletters to reach your mailing list. These services can be very helpful in understanding your fans because not only do they give your mailings a professional look but they also have functions that allow you to track how many people actually open and read your email/newsletter.

The ‘DIY’ Challenge

Artists will need to ask themselves the difficult and introspective question of what it is that they are truly searching for through their artistic expression, to make a living off of it, to be famous, a little of both?

Hip-hop artists have the blessing of being part of a technological revolution, which enables them to become self-reliant, in a way that has never been seen at any other point in history. Life during this revolutionary era forces us to ask ourselves deeper questions, in relation to our motives and the intentions of our art. In the past the only avenue for multi-media entertainment was through major companies that controlled the distribution channels, but today there are many alternatives to this. When focusing on Hip-hop music and the surrounding business, it becomes necessary to ask oneself, what is it that I am trying to accomplish and at what cost. The reason that this is necessary is because it is more difficult if not nearly impossible to get where you are going, if you do not know where that is. Many Hip-hop artists want to get signed to a major label, others want to create their own label, what do these things mean?

The DIY mentality does not stand opposed to any path, instead it affirms that ‘no matter what path you choose or stumble upon, the only person responsible at the end of the day is you’. The DIY ethic is a paradigm shift in the way we view ourselves and our role in our own careers. It is both empowering and intoxicating. I ask that you reflect on how you can use some of the resources that I have mentioned in this blog for your career, but first you must answer the personal question of what it is that you want out of your career.

Wishing you continued success!

Cristopolis Dieguez
latinohiphop.org
cristopolis.com
202.730.5012

You may have 40,000 MySpace friends who know your face (until you change your main pic), but do they have a connection with you or your music?

PT Barnum once said, “Without promotion, something terrible happens—nothing!” As a master promoter, Barnum understood the importance of making a splash and just how to do it. With the right advertisement or exhibition, he could easily attract people to his circus the first time, but what about after that? How would he get people to keep coming back for more? He knew that he would have to offer an unforgettable experience, something that was more than they had ever expected.

I think a lot of people have the wrong idea about how to promote music on MySpace. I think Bob Baker of TheBuzzFactor.com said it best: “The only thing that determines your material success with music is the number of fans you have who are willing to spend money on your CDs and merchandise and pay admission to your live performances. That’s it. It doesn’t matter who your manager is, who produced your CD, how many radio stations are playing your songs or what critics are writing about you. None of that matters in the long run.”

The goal of your MySpace page should be to build a strong fan base not to make a lot of friends. Fans buy your music and pay to hear your perform live; friends expect a free copy and want to get into your shows free. Some artists believe that if they obtain a certain number of friends and get so many plays, a record company will sign them. That is not true! I know that you hear lots stories about how people are discovered on MySpace, but most of those claims are overblown by the media. I guarantee that those artists were not exclusively promoting their music on MySpace.

When people visit your MySpace page let them experience you and your music. How do you convert a visitor into a fan? The same way you write a good song or make a good friend—you share a piece of yourself with that person. Write blogs that tell visitors about your hopes, dreams and goals and how you’re planning to accomplish those goals. When people see that you’re trying and have a plan in place, they are more likely to want to help you achieve those goals.

Give them some music for free. People do not buy music based on a 60-second clip. Giving away music gives you, the artist, a chance to get that special one-on-one time you’re your visitor during their drive to work, a workout, or while they are doing house work. You don’t have give these visitors the original song from your album, but you can give them a live version or an acoustic version. Just give them something they can download and listen to whenever they want. Remember, purchasing music is three-step process: hear, like…then buy. They might have to hear a piece of your music twenty times before they like it enough to buy it. So give them a chance to really like your music.

Send them to your web page. Keep in mind that one hundred friends on MySpace who truly like your music and who are willing to pass the word along to others are far more valuable than 40,000 strangers who claim to be your friend but who have never visited your MySpace page long enough to hear your music.