I'm 16 and i recently got my first job playing guitar at a restaurant a few nights a week. The restaurant is paying me 15 dollars an hour and i make quite a bit in tips (more than the restaurant pays). I know that i'm gonna have to pay tax on what the restaurant pays me but i was wondering about the tips. Also, is there any way that when i buy some music equipment i can write it off on my taxes as a business expense? Please don't respond unless you really know what you're talking about. thanks
I'm a musician, and it's simple. Just keep a ledger of your earnings. And be faithful about it. Also, keep a file for all of your receipts, ANYTHING you buy that enables you to become a better performer is going to be filed away in this file; music equipment, new strings, repair receipts, (if your guitar needs something done to it), gas receipts to and from your home, all the mileage you rack up driving from your HOME to your JOB, (a tax preparer will tell you what mileage is acceptable and what isn't) keep track of all of this. Also, I believe private lessons will fall under the "write-off" category, again, check with your tax professional. If you are required to dress a certain way, (clothes you might not wear anywhere else but to work), those receipts go in this file. Then when you file your taxes, you'll need to go to a tax preparer – you'll file a Schedule C form along with your federal and state. A tax preparer will want to see your tallies, not a box of receipts with nothing figured up, so be savvy and do some homework before you go. When you're self-employed you have to pay your own social security – which is a real CHUNK of tax. But – at least you're your own boss, right?