Welcome to the start of the new school year my AMP friends!
If you're anything like me, the start of the new school year feels like the start of a WHOLE new world of possibility - with new students, new schools, new families, new policies, new clients, new fee rates and new jobs. Its a lot to think about at once, and there are so many moving parts, you might feel like nothing is ever under control!
Let me start out by saying "I HEAR YOU!"
There are so many things to juggle at the start of the year (whether you're in the Northern hemisphere and the new school year is now, or in the Southern hemisphere and you've just begun a new fiscal year), sometimes its easy to let things fall through the cracks.
But there is one thing that is especially important for you to get on top of - and that is your TAXES!
I know, its not the most fun (funnest?) of subjects to talk about, but today I wanted to give you a list of some basic tax write offs that could save you money at the end of the financial year.
I do need to state that I am not an attorney, accountant or financial advisor, nor am I holding myself out to be. The information contained in this Website is not intended to be a substitute for legal or financial advice that can be provided by your own attorney, accountant, and/or financial advisor. Although care has been taken in preparing the information provided to you, I cannot be held responsible for any errors or omissions, and I accept no liability whatsoever for any loss or damage you may incur.
If you have questions about the information below, please speak to your own accountant or CPA to ensure you're following the laws and rules of your state and country.
Ok, so now to the fun stuff!!
Of course, before you deduct any of the items below, be sure to check with your CPA or accountant to make sure they're related to your work. The IRS are not afraid to be in touch if there are issues, so be sure to have proof of everything, well maintained records, and don't claim anything that isn't business related. (I.e. if you follow the law, you'll be fine at tax time!)
THINGS YOU CAN WRITE OFF ON YOUR TAXES!!!
(So start keeping track of them. Make copies, track them online, use an app... AND update regularly. Tax time SUCKS when you're filing all of your receipts for the year!)
- Music books, sheet music, sheet music downloads
Keep ALL receipts of your sheet music and book purchases (audiobooks too!) and claim them all on your taxes - again, provided they relate to your job. These can all be claimed as necessary materials for your work, so even if its just a $2 sheet music download, it can help to offset your income at the end of the year!
- Home office deduction
If you have an office at home which you work from - teachers, consultants, home recording studios etc, you can claim your home office space on your taxes each year. This is great because you can not only claim a percentage of your residence as work space (think, a percentage of your mortgage or rent, electricity, water and utilities) however you must be VERY careful with this and ensure your home office is used for business purposes only. The kitchen counter is not a home office, neither is the sofa - although, lets be real, you can totally put a sofa in your home office, as long as its a biz-sofa. The IRS loves to check in on home office people as it is a very commonly misused deduction, but if you really do have a home office, its very helpful.
- Mileage deduction
If you have a home office, you can also claim the mileage deduction! Every time you travel to a clients home, or to an event which requires you to leave your office, you can deduct the mileage. There are two ways to do this - using the standard IRS mileage calculator, or with your receipts. The standard deduction is usually the simplest and easiest deduction, but there are some limits on this. Check the IRS website for more details on this https://www.irs.gov/credits-deductions/individuals/standard-mileage-rates-glance
Keep track of ALL business related and personal mileage so you can know exactly how much of your annual mileage is business related and how much is personal. (Don't just track business alone!)
- Conference attendance and travel costs
If you attend conferences, professional events or programs for professional development, CLAIM IT ALL! Did you travel? Did you have to pay registration? Did you eat? These can all be claimed at various rates on your taxes. KEEP ALL RECEIPTS and track this information. These can be large deductions at the end of the year!
Food purchases can be claimed if they relate to your travel, and will be deducted based on the IRS rate. - At time of publishing, this was a 50% limit.- https://www.irs.gov/publications/p463/ch02.html
- Instrument purchases
Did you buy a new instrument this year? This should be an easy one, but GET A RECEIPT and claim it on your taxes! Your accountant can help you figure out the best way to claim this (in one hit, or depreciated over time), but
- Business purchases (Hello new macbook Pro!)
I recently bought a new computer, because my old one was dying and I had a really hard time doing ANYTHING on it. It was the start of the year, I needed to be emailing hundreds of people a week, and my computer would decide to shut itself off just for funsies. Purchases for your business can be claimed like the musical instruments above. Keep your receipts, know that you can offset your income, but also dont just buy things because they can offset your taxes. I bought the best computer I could afford, not the best computer on the market, because I don't get all of the money back at the end of the year and I have to actually pay for it! Be smart about it.
- CD's and DVD's
Much like sheet music and books, CD's and DVD's can be business related expenses. As with pretty much everything else though, make sure its relevant. As much as I'd like to claim that buying the box set of "Games of Thrones" will enhance my teaching, the IRS really wont see it that way if they look into it. The newest recording by the London Symphony however would be a different story.
- Health Insurance
If you are a sole proprietor, you will most likely be able to claim your health insurance on your taxes. There are a few caveats, but info can be found here - https://www.irs.gov/uac/newsroom/dont-miss-the-health-insurance-deduction-if-youre-self-employed
- Office supplies
STATIONARY FOR WORK CAN BE DEDUCTED! Yep. You need it, you claim it. I love stationary shopping and knowing that the new pens, highlighters, notebooks and paper I buy can go toward offsetting my taxes makes the process even more fun!
- Phone and Internet
If you use a phone or the internet for your work, you can deduct these! The simplest way to do this is to have a separate line for your phone and internet, but if this isn't possible, you can claim a percentage of your bills. Please don't claim 100% of your personal cell plan on your taxes - no one will believe that you dont check facebook, or text your friends, or call your family, so make a realistic claim based on your use of these services. Check with your CPA to figure out what your percentage should be.
- Professional memberships
This should be an easy one - but claim all professional memberships you are part of. The music society you just registered for? Claim it. The instrumental organization? Yep! These are legit expenses for you, so include these at tax time.
Have you pursued professional education beyond school designed to enhance your career or current business? Did you take a business course, or attend a summer intensive? These can be claimed on your taxes too. Check this page out for more info - https://www.irs.gov/taxtopics/tc513.html
Some things you can't deduct
(this is not an exhaustive list)
- Work clothing (unless a specific uniform)
The IRS allows you to claim your work clothing if it can only be worn for work and not elsewhere. Think about nurses and doctors and their scrubs. Scrubs can be claimed, but the white sneakers worn with the scrubs cannot be. Why? Because you can use those white sneakers outside of work (even if you don't want to). The performance suit or ballgown? Nope. You could wear that off the stage (to a wedding for example), so you cannot claim it. I WISH I could claim all of my clothes, because I only buy clothes that I can wear to work, but because I can also wear these outside of work, no deduction allowed.
- Mileage - if you don't have a home studio
You must be travelling from your work base and back again to claim the allowance on deduction.
- Lunch expenses at your job if you're close to home.
Just like a classroom teacher cant claim lunch as a work expense, you cant claim it as a sole proprietor. If you have a business meeting, you can claim 50% of the lunch, but it must be a business meeting.
I have one other SUPER IMPORTANT TIP for you with your taxes.
As a self-employed business owner (of any kind), you MUST pay taxes on a quarterly basis. The IRS will penalise you for not doing this, and its super easy to work out through your accountant or CPA.
It makes taxes hurt less at the end of the year too - and BONUS... your accountant's fees are tax deductible too!!!
Want more info? Head over to the IRS' website - https://www.irs.gov/individuals/self-employed