If you earn less than $16,000 for the year as a musician, you may be eligible to deduct business expenses as an “above the line” deduction, meaning that it can directly reduce your adjusted gross income. This could be an advantage for musicians. The following information is from IRS publication 463 (see www.irs.gov):
If you are a performing artist, you may qualify to deduct your employee business expenses as an adjustment to gross income rather than as a miscellaneous itemized deduction. To qualify, you must meet all of the following requirements:
- During the tax year, you perform services in the performing arts as an employee for at least two employers and you receive at least $200 each from any two of these employers.
- Your related performing-arts business expenses are more than 10% of your gross income from the performance of those services.
- Your adjusted gross income is not more than $16,000 before deducting these business expenses.
If you are married, you must file a joint return unless you lived apart from your spouse at all times during the tax year. If you file a joint return, you must figure requirements (1) and (2) separately for both you and your spouse. However, requirement (3) applies to your and your spouse’s combined adjusted gross income.
If you meet all of the above requirements, you should first complete Form 2106 or 2106-EZ. Then you include your performing-arts-related expenses from Form 2106, line 10, or Form 2106-EZ, line 6, in the total on Schedule 1 of Form 1040.
If you do not meet all of the above requirements, you do not qualify to deduct your expenses as an adjustment to gross income.