Your Zine and the Taxman
by Rob M. Blynd
(from Underdog, Spring 1998)
Are you in a band? Do you publish a zine, put
out or distribute records, book shows, DJ, etc? Are you a writer,
photographer, artist, or poet? (Actually, if you're a poet, fuck
you.) Are you a freelance employee, like most movers, childcare
providers, computer programmers, and bar/restaurant types are?
If you said yes, or even if you're considering pursuing something
along these lines, read this! It may save you hundreds, possibly
thousands of dollars!
The basic idea
is to file a couple of additional forms with your tax return
reporting your business income, err, I mean loss. This loss lowers
your taxable income, reducing your tax liability and increasing
your refund. In other words, all the money you spend on your
projects is tax-free. We do this by reporting your DIY type activities
as a sole proprietorship. This isn't that hard, you don't have
to register your business or see a lawyer or accountant or anything.
I'll also show you how to get money from previous years, if your
project is no longer active. You don't need a receipt for every
single thing; I'll show you how to get around them.
During the '80s,
a lot of people joined Amway, a pyramid structure corporation,
for a tax "write off." This is very similar to what
I'm going to show you. The IRS allows sole proprietorships to
claim losses three out of every five years. In most cases, you
only need to file one additional form with your tax return, called
a Schedule C.
When I first started
thinking about writing this article, the idea was to make it
a "how to," technical thing on taxes for DIY types.
It seemed like a good idea at the time, but it wasn't. Such things
are hell to read and write, so it probably would have been confusing
and hard to follow. And even if I was able to express all the
info clearly, by the time you finished reading it you would still
It's just too much
information for the space I have. I think it will go better if
I just give you a general idea of the ways punks can use current
tax laws to their advantage, and get you acquainted with some
of the forms you will need. Then, when I'm finished, I'll tell
you where you can find the additional forms and information you're
gonna need. I promise that it won't be too hard to follow, and
there's nothing boring about free money.
IS FOR FUN. IT'S A HOBBYNOT A BUSINESS." I know most
of you are thinking this, as this is probably (hopefully) your
approach to what you're doing. Why make it a business? What's
so punk about taxes? Well, what's punker than letting the government
keep as little of your money as possible? A lot of people don't
believe me when I tell them this stuff. (Ed.Take this guy's
word for it. He's a CPA.) A response like "Are you sure
it's legal, dude? My band's a money pit " is common. Fuck
yes it's legal! Here's the key: you must actually be doing this
shit. The legal term is "active participation"; you
must be involved in the business, and the business must be active.
If the IRS audits you, visits your house, and finds that your
band / zine / label is nothing more than ideas and talk, you're
fucked. If your band's been playing shows and making records
or your zine exists, etc., you are in the clear.
and musicians have taken cases to the Supreme Court and won,
defending your right to claim these losses. The government looks
at it like this (and I'm paraphrasing): although you're making
no money, and odds are you never will make any money, there is
a slight chance that you could make a significant amount at some
time. For this reason it is a business, not a hobby.
OK, so it's not
too proper to think about the remote chances of your sucky project
going rock star, but let's not make this a Green Day/ Nirvana
debate. Use the laws to your advantage, and use that extra money
to make your activities that much better!
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