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Monday, June 26, 2017

Seven Tips for Singer Taxes: Tip #6

We're getting closer to the end of this series that I've been calling Seven Tips for Singer Taxes. Thus far, we've covered some basics, and five of the seven tips:
Tip #1: Keep a log of all your income.
Tip #2: Put all your self-employment income into a separate checking account.
Tip #3: Only use your business checking account for business.
Tip #4: Save for and pay estimated taxes.
Tip #5: Track mileage.
Mileage is usually my biggest, single business expense. The second, however, winds up being
Tip #6: Claim a home office expense.
A home office is a common business expense for the self-employed, specifically those who work from home at least part of the time.

Singers definitely fall into this category. The most obvious work that we do from home is probably teaching lessons. But we also learn our opera scores and practice at home. While these don't directly generate actual dollars at the time, this is still income-producing work. And it is most often done at home.

A home office is a portion of your home that is used exclusively for your business. For me, this means two parts of my house. My music studio is the biggest one. My piano's in here, and it's dedicated working space for learning music and meeting with clients, such as for voice and piano lessons. (Follow the link if you're interested in lessons, and apologies for the unsophisticated website.) Not only that, but I'm frequently filming new episodes of the Singerreise Video Podcast there.

My home office also includes a more literal "office," the room where my ancient computer is set up. There, I edit and publish all of my Singerreise videos (several hours each!), and am constantly emailing and networking. Honestly, I spend more of my time in that little room than in the big one.

I've measured the sq ft of each room, totaled the two together, and divide by the sq footage of my whole house. This comes to about 17% of my house being a home office.

Anything I spend on those specific rooms is 100% a business expense, like when we put curtains in the music studio. But, the majority of this the home office expense comes from 17% of anything that I spend on the whole house.

This winds up being things like HOA dues, property taxes, home owner's insurance, utilities, and even yard work and other general maintenance. Even at 17%, these add up!

Like tracking mileage, though, this one is a little harder to account for through the year. You don't "see" this business expense when you simply look at the balance of your checking account, because, for the most part, these expenses are being paid for out of your own pocket during the year.

Tracking the home office expense is also pretty tricky, because it requires pieces of information from so many sources. Sometimes, larger expenses also have to made into a depreciating asset. It can help a ton, but done wrong, can really mess things up. You're probably going to need some help with this one.

That brings us to our final tip, coming up in just a little bit!


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