Are paying gigs taxable if this is just a hobby?

[RP]

Originally Posted by RustyAxe

Oh c’mon. The real tax cheats aren’t those making a couple grand a year in dive bars.

Exactly. Tax laws sometimes make doing the right thing tough to do unless you use outside tax preparers. Even if the OP has deductions that outweigh his minimal income, I imagine it’s still a royal PIA to sort through the forms, understand the relevant tax laws, maintain receipts and file....

[DenverSteve]

Originally Posted by JayBee1404

In the UK, it would be classed by HMRC as forming part of your income, and would have to be included on your tax-return. Expenses incurred in carrying out the gig - travel costs, strings etc. - would be allowable against income.....

You are correct. There is no difference. Even if the amount falls below the amount that a venue would have to issue 10-99 (usually $600), claiming the income would still need to be reported. If you're getting $1,000 it's likely the venue will be filing a 10-99, even if it was paid in cash.

[rokdog49]

Originally Posted by ctgagnon

One of the reasons our taxes are so high is because of all the tax cheats that don't report all their earned income and the rest of us take up the slack. I've always reported all gig money. It's the right thing to do. "Getting away with it" isn't the bar one should aspire to.

That’s not my take on why our taxes are so high, but I’ll not go down that rabbit hole.
I’m reporting my gig income though. I seriously doubt I’ll be paying any taxes on the pittance I’m earning.

[wguitar]

OP here - Thanks for all the input!

Need to go and practice now.

[RP]

Whoever thought that playing the guitar for fun could get so complicated???

[ManyMartinMan]

You are now - in writing - stating what you are doing and asking other's to offer legal/tax accounting advice, in writing. I would advise speaking to your tax preparer for advice. If you don't have one, now that you are co-mingling multiple income flows into your stream, get one.

[wguitar]

MMMan -- I agree

[sdelsolray]

Yes, it is income. You can deduct reasonable and necessary expenses, including depreciation of equipment you use.

As to the "hobby" issue, if you have two years out the the last five years with claimed losses from the endeavor (i.e., expenses exceed gross income), the IRS may seek to disallow the deductions going forward, although enforcement of this rule is quire sporadic.

Failure to report the income are federal and state criminal felonies.

[Mr. Jelly]

Originally Posted by ctgagnon

One of the reasons our taxes are so high is because of all the tax cheats that don't report all their earned income and the rest of us take up the slack. I've always reported all gig money. It's the right thing to do. "Getting away with it" isn't the bar one should aspire to.

I agree … to a point. If done correctly as in the right thing to do would entail writing off any and all purchases involved in earning this income. Strings, guitars, mic, traveling expenses like gas, your phone and tax preparation etc. These write offs are used against the tax on the income. It's the way tax law is written so it's in the design. Most people that go this route, other than major money makers, do it with the intention of putting the advantage in their favor. Their every day income becomes involved also so since they are forced to do this deep dive for a couple of hundred dollars they most often take it to the limit. So doing the right thing can quit easily result in the government getting less tax money. It's the American way.

[alnico5]

A hobby is taxed 100% with no deductions IIRC.
If you make a few hundred a year playing, the weight on your conscience need not be heavy.

[Neil K Walk]

If you’re getting paid for it, it’s a business not a hobby. Congratulations: you’re working. You now have the privilege of paying taxes.

[ctgagnon]

I wasn't raised that "the right thing to do" was optional or only if not difficult or likelihood of getting caught.

[LadysSolo]

Honestly (LOL!!) it's not that hard to do even if doing your own taxes (I have been doing it for my farm that makes minimal profit in addition to my main income for 20 years.) Takes me about 2-3 hours/year, and I itemize everything. I make maybe $50 profit/year, but if I am ever audited, I have a large box for every year with all my records.

[Neil K Walk]

Originally Posted by Mr. Jelly

I'll ignore the CYA caveats. If you are paid in cash don't tell anybody. Ask if the venue is claiming the payment or it's just a pay out if you are paid by check. You may want to limit the amount of money that the government is being notified as income to below a set amount. It may be six hundred dollars but I don't know any longer. If you claim it as income you can get your money back by claiming expenses. It's almost like free equipment. Almost but not really. Claiming or not claiming the money as income are two totally different ball games. It's a line that once crossed often means that your expenses have gone up and that $150 you are paid turned into $100 after your tax bill. You also may have to pay the tax preparer more for their services. Now the truth is if you end up several hundred dollars into the "should pay taxes" area and you don't have other illegal tax issues just wait until you get flagged and pay the bill at that time. It's cheaper and you probably won't get flagged. No flag no pay. With government cut backs they don't have enough people to look into the big fish now days not alone somebody that made $500 extra. Don't tell any body I told you this though, okay?

You're joking, right?