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fib Inner circle 1535 Posts |
Can someone explain to me the deal with filing with the IRS as a self-employed magician? Can I deduct all the stuff I bought in 2007 if I attained a steady income? Does my income have to reach a certain level for me to be eligible?
thanks, fib |
rossmacrae Inner circle Arlington, Virginia 2475 Posts |
Your magic activities are a business. Your business is (I'm fairly certain) a "sole proprietorship." That means that you need to file a "Schedule C" along with your 1040.
Go ahead and assume that your income is sufficient - even if your expenses exceed your income, it's still a business from the start, and your legitimate expenses are deductible if you make a profit in 3 out of 5 years (if you don't, the presumption that you are running a business changes, and it's a hobby instead). Pay close attention to what you can deduct. Some people are too timid in taking deductions and pay more taxes than they need to, others take deductions that aren't legit (like trying to deduct the full dollar value of their show if they do a charity show for free). A word for EVERYONE - last year my tax software came with a "deduction finder" program, and it found me a bunch of stuff - I was especially gratified by how much value it placed on the used items I donated to the Salvation Army thrift store. Short of personal help from an accountant, your best choice is to cough up the $80-odd bucks and buy good tax software. I use Turbotax HOME AND OFFICE FEDERAL AND STATE edition. Whatever you buy, make sure it calculates a Schedule C for you (lesser editions do not). As you go through the Q&A process the program asks you, you should find it easy to get it right the first time. In addition, such software is usually pretty good about alerting you to all the sorts of deductions you can and cannot take. PS - here are a couple of links. Although both links are designed for self-employed writers, use your brain and you'll gain some more insight: HERE and also HERE |
NJJ Inner circle 6437 Posts |
Fib - the best tax advice I ever got was to get a good accountant. It's cheaper then you think and they'll save you money!
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Jim Snack Inner circle 1338 Posts |
Good advice from Ross. Also, pick up a copy of Sandy Botkin's book, "Lower Your Taxes - Big Time" for more more solid information on tax strategies for small business owners. Just start educating yourself. It is a pain in the rear, but a necessary part of running a small business.
Jim |
Skip Way Inner circle 3771 Posts |
Definitely hire a good accountant but don't forget Steve Snyder's books available from most magic shops and his website at http://www.thetaxmagician.com . Great advice for the working pro and semi-pro magi. I refer to them regularly.
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Magic Youth Raleigh - RaleighMagicClub.org |
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