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New tax reality for indie sound people?
Old 1 week ago
  #1
Lives for gear
 

Thread Starter
New tax reality for indie sound people?

I am not looking to start a political discussion here. I'm asking about what the real effect on the tax situation of what I think of as a typical GS member of this forum will be of the new USA tax bill that seems likely to pass in the next few days. By typical I mean someone who is running a 1-or few-person indie sound business, mostly as a location sound recordist using gear they own themselves, and who has many currently deductible small-business type tax expenses. I've read everything from dire warnings about the loss of any deductions for home office, tools, office supplies, advertising, travel, phone, mileage, continuing ed., etc etc to others saying that all that isn't true. What does anyone know about this, substantively? If you have a tax advisor, what have they told you about this? Again--I'm not wanting to start a pro vs. con or Repub v. Demo discussion here; I'm looking for practical strategies to deal with what kind of looks like it will be the new tax reality for many of us.
Old 1 week ago
  #2
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Bruce Watson's Avatar
 

Quote:
Originally Posted by philper View Post
I'm asking about what the real effect on the tax situation of what I think of as a typical GS member of this forum will be of the new USA tax bill that seems likely to pass in the next few days.
A) They haven't passed it yet, so things haven't changed, yet.

B) They've told us very little about what's actually in it, so all people can do is speculate as to how it will finally work.

That said, personally I think the regressives are trying crush me. I'm calling my representatives in both houses asking them to vote against. If they don't get any pushback, they'll do what the donor class tells them to do. Which isn't anything new at all.
Old 1 week ago
  #3
Gear Nut
 

One of the beauties of living in Massachusetts is our representatives are all progressive. No need to call and persuade them, we just vote for them

You're right Bruce, there's nothing but rumours, and none of them are good for the little guy.
Old 1 week ago
  #4
I heard most itemized deductions will not change. We should still be able to deduct gear purchases and other expenses.
Old 1 week ago
  #5
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Brent Hahn's Avatar
 

I haven't read it -- is reading it even possible? -- but my understanding is that it eliminates some or all of unreimbursed employee expenses. If you're an indie sound guy you're not an employee, so nothing changes. If, on the other hand, you're an underpaid elementary-school teacher buying art supplies because your school district won't, you're screwed. That's when you get a DBA and call yourself "Ms. Wilson's Art School" and operate your "business" at a loss for the next five years.
Old 1 week ago
  #6
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None of us or anyone else has read it because as of today 11/30/17 the Senate version is in process and when finished the conference to merge the two versions will occur. It is clear to me the real costs of doing business and realistic depreciation schedules will still be available but, as now, will require itemization. Apparently the biggest hit will be removing state and local income tax deductions and removing the deductible status of local property tax is also a possibility: however this is a long overdue massive bill that needs to be right in balance for main street or it will not pass. High tax states like NY and CAL are screaming bloody murder however perhaps their vitriol needs to be directed toward their respective state and local spending patterns that have been out of control for decades.
Hugh
Old 1 week ago
  #7
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tourtelot's Avatar
Quote:
Originally Posted by tailspn View Post
One of the beauties of living in Massachusetts is our representatives are all progressive. No need to call and persuade them, we just vote for them

You're right Bruce, there's nothing but rumours, and none of them are good for the little guy.
Yep. In Washington as well. When I call my representatives' offices, the folks that answer the phone say "Well of course."

D.
Old 1 week ago
  #8
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surflounge's Avatar
had an IRS agent on my doorstep Sunday asking if I owned the masters for recordings being deducted as tax expenses. Fortunately yes, I had the original tapes the vinyl was printed from and got cleared after a long day of explanations. Wanted to let ya'll gearslutz know that writing-off music recording is a red flag alert to IRS because too many bogus schemes ruined legit work for honest folks, and special agents are sent to investigate. This happened to me in the San Diego area of California.
Old 1 week ago
  #9
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bgood's Avatar
Quote:
Originally Posted by hughshouse View Post
None of us or anyone else has read it because as of today 11/30/17 the Senate version is in process and when finished the conference to merge the two versions will occur. It is clear to me the real costs of doing business and realistic depreciation schedules will still be available but, as now, will require itemization. Apparently the biggest hit will be removing state and local income tax deductions and removing the deductible status of local property tax is also a possibility: however this is a long overdue massive bill that needs to be right in balance for main street or it will not pass. High tax states like NY and CAL are screaming bloody murder however perhaps their vitriol needs to be directed toward their respective state and local spending patterns that have been out of control for decades.
Hugh
so much for keeping politics out

Good job!
Old 1 week ago
  #10
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Thomas W. Bethe's Avatar
I am adopting a "wait and see" attitude before I make any changes to the way I do business. My Tax person says that there are so many changes possible he too is waiting to see what shakes out in the final bill.

ADDENDUM: The bill has passed but it is still not law (lots of hashing out to do between the house and senate) . My tax person says it will not effect this years taxes.

Last edited by Thomas W. Bethe; 1 week ago at 12:47 PM..
Old 1 week ago
  #11
The bill has to pass.
Then (later) the IRS has to digest it, modify their systems and forms, and produce any guidance on "gray" changes. Tax pros and Turbotax/et al have to modify their software.
I don't believe the bill is supposed to change the tax code in tax year 2017, so there's no need to panic. If anything passes that's really awful, there's still time in CY2018 to further revise the code.

I personally don't see what the rush is, but to speculate there would surely go down the political path we want to avoid.
Old 1 week ago
  #12
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Plush's Avatar
From what I've read, all Schedule C stuff will mostly stay the same. Section 179 expensing limits may rise.

If you're running a sub chapter S corp., you may see rates to to 25%.

If you're a recordist who has no work but still you bought a lot of expensive equipment, you might get money back from the govt. this year. There are now more opportunities for low income people who don't file a tax return to get even more money back in their pocket.
Old 1 week ago
  #13
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I'm in the process of setting myself up as a company, and was recommended to do an s-corp. However, my mind for business is not great, does anyone have any good resources that they could recommend or advice to post here inherent to doing sound / live recording? I just got contacted to be the house guy at a church/ event space in NYC and there are a lot of events through the year. I've been working for someone else in this space for about 5.5 years, mainly on weekends but the occasional weekday event that he couldn't do, while working full time as a social worker, but I'm looking to transition to working in my own practice for social work on a more limited basis and making sound my main thing, so just trying to set myself up in a way that makes sense and continues to provide for my family.

I've been doing sound/ recording/ playing bass in wedding bands, etc for a long time but always as a sole proprietor, so I know that has to change.
Old 1 week ago
  #14
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Tommy-boy's Avatar
 

You probably need to wait until the house and senate bills are reconciled. There are a lot of variables up in the air, including the rate at which pass-through entities (like S-Corps and LLCs) are taxed at.

Under current rules (before the tax law changes being wrangled over), it would generally make sense to organize as an S-Corp or LLC as the income would not be taxed at the entity level, but would flow to your personal return. Of these two, single member LLCs (as in you are the only owner/member) are popular because they can eliminate filing a federal tax return at the LLC level. They are deemed "disregarded entities" by the IRS. Income flows straight to your Form 1040. One less form to fill out is always welcome.


-Tom
Old 1 week ago
  #15
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hbphotoav's Avatar
 

I've been a Sole Proprietor since 1982 here in NashVegas, with the same law-dog/accountant (he's both) since 1985. IME, it's CRUCIAL to get into a solid relationship with your tax preparer and legal counsel (I realize I have it very, very good here... and am thankful to the persons who referred him to me) and maintain it. My guy was doing small business sole prop/C Corp (in a city FULL of freelancers, musicians, entrepreneurs) from the get-go, and I can't complain a whit. My advice (based on two years' experience, long ago in another century) is to stay far away from the big commercial entities (H&R Block and its ilk) as they cannot be specialized in the nuances of "our" legal and financial lives... nor can you enjoy a long relationship with "a" provider (lots of personnel turnover annually). My guy has been a great guide through city, state and national tax considerations, as well as providing wills, dealing with codes, estates, like that.

One old guy's experience... but I don't tell lawyer jokes.

YMMV. This works for me.

HB
Old 6 days ago
  #16
Lives for gear
S Corp v llc decision can also be affected by how your particular state taxes them. There are tax lawyers in nearly every major city. Better to get advice setting up than trying to get out from under something you weren't expecting later.
Old 5 days ago
  #17
Lives for gear
 

Thank you for the replies so far, very helpful.

Definitely no association with a big tax prep company, I have an individual accountant. He recommended S Corp for NJ and said it doesn’t make the difference it used to make to do it in a different state. However, I’m still looking to do my own research as well to get a better understanding. My sister owns a Pilates studio business and is not very happy with s-Corp in her situation, so I definitely need a better understanding.
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