You’re a Musician… but is it a HOBBY or a “REAL JOB?”

There are new IRS tax rules that may benefit indie musicians.  On October 2, 2014 the US Tax Court issued its decision in favor of Susan Crile (well known fine artists with a great reputation, but rarely profitable).  The IRS initially claimed that Ms. Crile’s legal position that she was both an artist and teacher was “artificial” and that her art-related expenses should not have been filed as business expenses.

So what does this mean for artists as a whole?

This means that tax courts will be examining other factors beyond profitability.  They will be looking at the manner in which you conduct your business, the time and effort you put into it, your history of income or losses, the expectation of appreciation in value for your art, the amount of occasional profits you receive for your art etc…

Ultimately, this decision demonstrates that the Court has some understanding that art and music are unlike other trades and professions, and many factors can cause legitimate artists to not show a profit at year end and these reasons don’t mean that you’re not a “professional artist“.

Keep working on your craft and actively set up achievable objectives to make a profit and hopefully your bank account will start growing soon.