From The Side of the Road… tax advice for the bluegrass musician

I’m traveling today, so this is actually a rerun from years gone by. Since the subject is taxes for musicians, though, you’ll find it has a certain timeless quality, because nothing else gives quite the sense of deja vu as tax season. This was a two-parter so the link to part 2 is below.

It has been my contention for a long time that a great number of bluegrass music fans have no idea how little money the average bluegrass picker lives on.

That’s generally how the average bluegrass picker would like it to be, too, since people in the public eye don’t often like to advertise their poverty, unless they’re folksy politicians in an election year (the ones wearing jeans and a flannel shirt awkwardly). And so, given the choice, bluegrass musicians would prefer to create the impression that while they came from very humble beginnings, they now have a Jaguar sitting in the garage, even if it’s much more likely that they have an actual jaguar (i.e. the feline predator) in their garage, that got in through the hole in the wall.

I love the line from Tom T. Hall’s Homecoming

I got this ring in Mexico, and no, it didn’t cost me quite a bunch
When you’re in the business that I’m in, the people call it puttin’ up a front

There are certainly a number of bluegrass artists making a decent living, but you’d be hard-pressed to find one who actually took up bluegrass music for the money. It’s not a get-rich-quick, or even get-rich-slow business.

Which brings us to this tax season which is upon us. Though all of us, regardless of income bracket, hate this season, some may hate it for very different reasons than others. For some bluegrass musicians—and this is the part that may be hard to understand—getting to the point where you actually have to pay some federal income tax can be very exciting. It’s a sign that you have arrived, and though you may be a long way from having that Jaguar in the garage, there’s at least now a higher probability that you have a garage, maybe even one with a working vehicle in it, or maybe just a lot of crates of old Bill Monroe and Flatt & Scruggs LPs.

Once you reach that thrilling pinnacle where you are now contributing to the running of the government, feel free to enjoy writing that check made out to the U.S. Treasury and/or government of your residence. You are now helping to defend the nation, pave the highways, and provide funding for the arts (like the coveted capo grants you’ve heard about), helping to prop up all those non-tax-paying, slacker musicians you once were one of until this April.

Now that you’ve experienced that heady middle class rush, though, you must quickly turn your attention to making sure this tax-paying thing doesn’t become an annual event. Or, if it does, you want to make sure it stays within a comfortable, low two-figure range

That’s where a little tax advice for the working musician comes in handy. Just as with medical advice, discussed here recently, people are happy to dispense tax advice with absolutely no qualifications to do so. Advising people, after all, especially if you’re not their accountant, is easy and risk-free. You’re not the one who will have to face an audit or do time in the federal pen for laundering T-shirt money (you’re not even supposed to launder the T-shirts themselves).

In the first year that I played music full time, I decided to be brave and do my own taxes. I had the impression that hiring someone to do it was out of the question, for some reason. I thought people who used accountants were like people who had maids and hired chauffeurs. And anyway, how hard could it be? (you’re laughing now, but at the time, that’s what I really thought).

All I needed was a little advice. What I discovered was that most of the advice I got was largely based on hearsay, or the tax code as it was in 1964. Some of it was also openly criminal, like the suggestion I got to depreciate my instruments over five years, until their paper value was zero, then pretend to buy them again. Most of the people I talked to were either using accountants and really didn’t know anything, or they didn’t really care if what they were doing was right (“I just figure, if the IRS doesn’t like what I’m doing, I’ll just hand them my big pile of receipts and say ‘okay, you figure it out!”). The advice was generally not helpful.

In keeping with that spirit, I would like to offer you some tax advice of my own for the bluegrass musician, based on many years of crunching numbers, attempting to read wadded-up receipts, and trying to determine what “entertainment” means for tax purposes. It probably won’t be very helpful either.

And here’s the link to part 2. Good luck on the 15th, or whenever you actually file!