If you’re a musician and you’re paid cash or on a 1099, it means that you’re actually losing money and your employer may be breaking the law. It may seem like a good thing to not have taxes deducted from your paycheck — but this really means that your employers have not paid their fair share of taxes like Social Security on your behalf. These taxes are now thrown on your back when you pay your annual taxes.
In addition, musicians paid in cash receive no benefits for unemployment compensation, workers’ comp and disability. These are normally paid by employers who have payroll over a minimum size.
If your work took place in New York State and you were paid in cash, your employer is in violation of state law, which requires that musicians be paid as employees, not independent contractors. Your employer may be subject to substantial penalties.
When you are paid in cash, you may have to make quarterly estimated tax payments to avoid having a huge tax amount at the end of the year. (If these estimated payments are not made, you can face big penalties!)
If you are an employer, you need to know that musicians are employees, not independent contractors. You must pay taxes on their behalf. If you are a bandleader or contractor budgeting for a gig, you should budget an additional 16 percent of the total scale to cover taxes.
If you are a musician who is paid in cash, you should call the union at (212) 245-4802 and ask for the rep or supervisor in your area of work (i.e., recording, club dates, freelance classical, jazz, music teaching, etc.). You have the right to be paid as an employee and your employers should be paying their fair share of your taxes.
Employers who want to do the right thing and pay musicians’ taxes have the option of using Local 802’s payroll service, Legit 802. We can take the burden of paying taxes off your hands. Call Leo Ball at (212) 245-4802, ext. 175 for more information.