Happy Tax Day, Artists

It’s tax day and my Twitter and Facebook feed is exploding with everyone rushing to meet the deadline.

A well visited post of mine, Tax Write Offs for Musicians, is probably a bit outdated but it still gets hits.

Because it’s too late for 2018, and because I am typing this on my phone at the Secretary of State, I thought I would share a few suggestions that have made my tax experience less painful and more predictable.

Your budget

If you don’t have a budget for your business activities (Schedule C) and a personal budget where you track all expenses by category, it’s hard to be ready for available write offs, and it’s impossible to attempt to predict your tax situation. I recently made this simple google sheets budget that has some formulas built in and can help track the money flow. Feel free to make your own copy! There’s also other great softwares and programs out there to help you manage it all.

One of the things I do every year is track the expenses related to my home, which allows me to easily total and percentage out my home office expenses.

I also can monitor my business income profit and estimate tax liability as the year goes (important especially if you’re not paying quarterlies).

Exemptions on your W4s

For individuals with multiple part time jobs, and freelance work, filling out your W4s (for the part time work) can be misleading. If you look closely at the form, there is a spot for your exemptions (and a worksheet), which when you add a number there, reduces the amount of taxes taken out of your paycheck, based on the notion that this is your ONLY paycheck. Here’s what it looks like: 

W4 main page.

At this point, I always make sure my W4s are filled out as “single” with “0” exemptions. This guarantees to pull taxes out at the highest rate possible for that one job.

If you follow the worksheet, it will guide you to claim exemptions for all sorts of things. This is fine and dandy except for when personal exemptions are eliminated in the new tax law. Or if you have multiple part time jobs, your gross income becomes much larger than any one of your part time jobs, so the taxes taken out do not add up to you actual tax liability and you end up owing money. I speak from experience on this. Here’s the exemption worksheet:

W4 personal exemptions sheet.

To repeat myself: if you are an artist with multiple part time jobs, my recommendation is to claim zero and file as “single” always. This can be especially helpful if you have a Schedule C (self employment) to add to the mix. With the extra taxes you owe from the Schedule C, if done right, the highest tax withholding from your part-time or full-time work can offset taxes owed from your self-employed income.

Get a CPA

My last bit of advice for your 2019 taxes is to find a CPA that fits your budget. Sit down and make an appointment to have them help you file your taxes. Come organized and loaded with questions. Learn as you go and have a tax professional think through things with you. If you file a Schedule C, you can also write off their services!

Now that you’ve suffered through this tax season, be prepared for next tax season by getting organized!