September 9, 2022

17 Tax Write Offs for DJs & Music Producers (2023)

Contents

If you're self-employed as a DJ or music producer, claiming tax write offs will reduce the amount of tax that you pay. In this article I'll review common tax write-offs that DJs and producers can claim. You can reference this list when filing your tax returns to pay less tax.

What are tax write offs?

Tax “write offs” are business expenses that reduce your taxable income. Write offs are also known as tax deductions. You report write offs on Schedule C of the annual tax return that you file with the IRS and state tax authority.

However, not all expenses are deductible.

The IRS requires business deductions to be “ordinary” and “necessary.” Ordinary means common to the industry and necessary means required in order to conduct business. You (generally) can’t take a deduction for personal expenses, such as groceries or Netflix.

For more information on how to save money on your taxes, check out our music taxes guide.

Who can take tax write offs?

You must be self-employed in order to take tax write offs for your music business. This means that you’re a DJ or producer and have the intention of being profitable or you conduct yourself in a business-like manner. If you DJ or produce music for fun, you can’t take deductions but you must still report income. Refer to the IRS guidelines to determine whether you’re a hobbyist or self-employed.

Why take tax write offs?

Tax write offs reduce the amount of income tax you'll pay. By paying less tax you keep more of your music business income, which of course is an ideal outcome. You can reinvest your after-tax savings back into your music business, save for retirement, or use them for whatever else. 

Production Expenses

As a DJ or producer, you should deduct music production costs on your tax return. Production costs might include: 

  • Services such as iTunes, SoundCloud, and Bandcamp;
  • Supplies such as cables, power strips and USBs;
  • Software such as Ableton Live or Logic Pro X;
  • Lessons and paid tutorials;
  • Other costs associated with making music.

Be careful not to deduct personal expenses. Some expenses, such as Spotify, might have a personal component. You should adjust your deductions to account for any personal use and be prepared to explain how you determined the adjustment should you ever be audited.

Event Expenses

The cost of parties and events that you organize are deductible to the extent they are connected to your music business. These expenses might include:

  • Performance fees paid to other artists;
  • Promoter fees; 
  • Insurance; 
  • Security;
  • Advertising; and/or
  • Permits.

Event expenses can also include food for the guests at your party; however if you're not making money from an event, then these expenses are considered personal and would not be deductible.

Travel Expenses

Travel expenses are deductible if you’re traveling to gigs. 

Travel expenses include the cost of unreimbursed flights, hotel rooms, ground transportation such as taxis and rental cars, and meals while on the road. You should reduce your deduction by the amount of any reimbursement you received from promoters or event organizers.

Personal travel expenses aren’t deductible. You should keep good records of your business travel in order to support your travel deductions in the event of an audit.

Personal Vehicle

If you use your personal vehicle when traveling to gigs, you can deduct your travel cost by taking the mileage deduction. 

However, unlike most deductions, mileage is calculated by applying a rate to the amount of miles you drove for business. Instead of deducting your actual travel cost, such as amounts paid for gas and travel, you report the total amount of miles driven to all your gigs during the year and apply the standard mileage rate to calculate the deduction (currently 62.5 cents per mile in 2022). 

Mileage deductions require you to maintain a mileage log “contemporaneously.” This means that you must track mileage as soon as you make the trip. The IRS doesn’t allow you to make estimates or rely on guesses after the fact. I recommend using mileage tracking software to automatically record your mileage via GPS.

You can't deduct fuel, maintenance and repairs unless you rent an additional vehicle for your sole use during the year (for example, if you want to drive separate cars for personal and business). If this is the case, track those expenses separately from your mileage.

Home Studio

Your home studio is the area in your home where you produce music or stream live shows. The direct and indirect costs of maintaining your home studio might be deductible.

Your home expenses must meet the IRS “Home Office” rules in order to be deductible. These rules stipulate that your studio must be “regularly” and exclusively” used for streaming. This means that you must have a dedicated area of your some that’s used only for the purposes of producing music, streaming, or other business activities.

For example, occasionally live streaming in your garage wouldn’t qualify because you stream there inconsistently (i.e. not “regularly” used) and you use the garage for other purposes (i.e. not “exclusively” used). 

However, the garage would be eligible if you don’t own a car and you don’t use it for anything else. This is just one example, so use your judgment in making this determination based on your particular facts and circumstances.

The home office deduction has two sub-categories: indirect and direct expenses. Indirect expenses apply to your entire home whereas direct expenses apply to your home studio only. Indirect expenses are deductible in proportion to your studio’s area to the area of your entire home or apartment.

You must actually pay the expenses in order to deduct them. If you split rent with a roommate, for example, you can’t take the deduction for their portion of the rent.

Home studio expenses include:

  • Mortgage interest;
  • Real estate taxes;
  • Insurance;
  • Rent;
  • Repairs & maintenance;
  • Utilities;
  • Cleaning;
  • Internet*; and
  • Mobile data*.

*These expenses should be deducted as a direct expense after calculating the business portion using a systematic, reasonable method.

Marketing and Promotional Materials

The IRS allows you to deduct the cost of marketing and promotional materials that help your business. This includes amounts paid for posters, flyers, business cards, and logos. It also includes art you use on your website or social media platforms to promote yourself as an artist or DJ.

Contractors

As a DJ or producer, you might occasionally outsource work to other people. The cost of hiring contractors for your music business is tax deductible. Contractors you might hire include:

  • Designers;
  • Photographers;
  • Videographers;
  • Editors;
  • Managers; and/or
  • Agents.

If your contractor is an individual or working through an LLC that they own, then you might need to file a Form 1099 for them in January. You should request a Form W-9 from anyone you hire to perform work on your behalf to determine their tax status. You must file a 1099 for any individual, partnership, or single-member LLC whom you paid more than $600 during the year.

Business Asset Write Offs

Assets are items used in your music business expected to have a useful life greater than one year. Business assets are subject to IRS depreciation rules.

Generally, as a self-employed DJ or producer, you can deduct any business asset that costs less than $2,500 in the year you purchased it. For any asset that costs more than $2,500, you must deduct part of the cost in each year of the asset’s “useful life.” Useful life is determined by the IRS according to standard depreciation tables.

Fortunately, even if your equipment cost more than $2,500, you might still be able to deduct it through Section 179 or temporary bonus depreciation rules. These deductions allow you to deduct the full cost of the equipment in the year it was purchased. Be aware that these deductions might require extra steps on your part when preparing your tax return.

You might have converted some property from personal use to business use when you began your music business. Within limits, you might be able to deduct the cost of that property by taking advantage of temporary bonus depreciation.

Music Equipment

Music equipment includes the cost of any specialized gear, devices, or other long-lived assets that you purchase for your DJ, streaming or music production activities. Examples include, but aren’t limited to:

  • Turntables;
  • CDJs;
  • Controllers;
  • Speakers;
  • Flight cases;
  • Lights;
  • Streaming tower;
  • Trussing.

Computers & Devices

If you’re producing music or putting together live sets, you probably use equipment that isn’t strictly related to music. Such equipment might include:

  • Computer;
  • Phone;
  • Monitors.

This equipment would be deductible to the extent that you use it in your business. You should reduce your deduction by the amount of any personal usage.

Studio Furniture

You probably use furniture in your home studio. This furniture might include desks, chairs, risers, stands, and tables for equipment. Furniture is subject to the same depreciation rules as your music and other business assets. You should also adjust your deduction by the amount of any non-business usage.

Other Write Offs

No one understands your music business better than you do. There are probably deductions I haven’t mentioned that you can take on your tax return. I’ll run through a few other example deductions below, but you’re ultimately responsible for the deductions you take. Use your best judgment and be prepared to substantiate your deductions.

Health Insurance

As a career DJ or producer, you may be eligible for the Self-Employed Health Insurance (“SEHI”) deduction. This deduction allows you to write off the cost of health insurance premiums under certain conditions, even though they aren’t strictly business expenses. Other health expenses, such as prescription meds, aren’t deductible as a business owner (unless you itemize your deductions).

Bank & Processing Fees

You might accept credit cards from your clients. If so, be sure that you report revenues “net” of processing fees on your tax return. The net amount would be the amount that hits your bank account after the payment processor collects their fee, not the “gross” amount that you invoiced. The processing fees are deductible expenses. Random service fees charged by your bank are also deductible. 

Professional Fees

You might pay someone to do your personal taxes, advise you on legal matters, or coach you on how to grow your brand. These expenses are deductible to the extent they are related to your music business.

  • Accountants (bookkeepers, tax preparers, financial advisors, etc.)
  • Lawyers & legal fees (entity formation, intellectual property, etc.)
  • Consultants (branding, coaches, technical, etc.)

Productivity Software

You might use software that’s not directly music related, such as Trello, Microsoft Office, or Google Workspace. To the extent that you use this software to support your music business, the cost would be tax deductible. 

Business Insurance

Having business liability insurance is often a smart idea. It’s usually affordable and you’ll be glad you have it when something goes wrong. Fortunately, the cost of business liability insurance is deductible on your tax return.

Licenses & Registration

You can deduct fees associated with legally changing your name or obtaining a DBA (“doing business as”) license for your DJ name. You may also need a home office permit and business license from your local jurisdiction. These costs would be deductible.

Office Supplies

You might purchase things from time-to-time for the benefit of your home studio. These purchases would be deductible to the extent–you guessed it–that the items are used in your home studio.

  • Cleaning supplies (disinfectant, wipes, fragrances, etc.)
  • Computer accessories (cables, hard drives, switches, etc.)
  • Reference materials (how-to-books, guides, tutorials, etc.)

Keeping Track of Write Offs for Your Music Business

Maintaining records is good practice for any business. By “records,” I’m referring to documentation such as receipts and also the system through which you track your income and expenses to build profitability reports. 

Recordkeeping is important for many reasons. Not only does it reveal your profitability during the year, it’s also tremendously helpful at tax time when your income and expenses are ready to go. In the event of an IRS audit, you’ll be relieved to have your receipts, statements, and invoices all in one place and ready to substantiate your deductions.

You can use free software like Wave or paid software like QuickBooks for this purpose or keep it simple with an Excel or Google Docs spreadsheet (both free).

Conclusion

I hope this article has helped you understand what you can deduct as a DJ or producer. Two general rules: be organized and be smart. Doing so will serve you well when it comes to taxes. You may also want to hire an accountant or tax professional who is familiar with the industry and can guide you through the process of filing your taxes, and give you advice on avoiding taxes.

This content is for informational purposes only and does not constitute legal, business, or tax advice. You should consult your own attorney, business advisor, or tax advisor regarding matters mentioned in this post. We take no responsibility for actions taken based on the information provided.

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