Seven Tips for Singer Taxes: Tip #1

In this article we're continuing a series I call Seven Tips for Singer Taxes. Previously, we talked about the major differences between being an Employee and being Self-Employed. Now, we get to our first tip!

Tip #1: Keep a log of all your income.

Self-employment, singer income falls into two categories: 1099s and non-1099s. You do have to pay taxes on both, so both have to be tracked.

In January every year, you'll get a 1099 for any work that you do where a single company (or organization) pays you more than $600 in a single year. 1099s summarize how much money you earned in the year, kind of like a W2s, except that they don't show any money being taken out for taxes.

You might do $50 in one month and $2,000 a few months later, but so long as the total in one year is greater than $600, law requires that that that organization sends you a 1099. And you'll get one of these for each company you work for. Often, I will pile up a dozen of these each year.

But you don't always earn more than $600 - sometimes it's just $50 or $250. Even though these smaller amounts aren't reported to the government by the company, you do have to pay taxes on them.

So you need a log of some sort. Because I'm a nerd, I use a couple spreadsheets for this. (I look for excuses to use spreadsheets!)

Here are the columns I use:

Event (like La Traviata)
Location (Seattle, WA, or Trinity Parish Church)
Client (Seattle Opera)
Check Date (the actual date on the check)
Amount (self-explanatory)
and Payment Method (usually "Check" but sometimes "Cash")

I update this as I am depositing the checks. Every check that gets deposited gets recorded.

I actually have two spreadsheets going, side-by-side. The one on the left is where I put smaller amounts, clumped by Client. I call this side "Non-1099". The right side I entitled "1099," and that has all the payments where I know will be paying me more than $600. Sometimes, when I do enough work for a client that they've paid me over $600, all those entries get moved from the left side to the right side.

If I was paid in cash for a gig, I plug it into the spreadsheet as I'm depositing other checks. Usually there is a sticky note involved so that I remember where it came from. Cash counts as income and does have to be reported. That's why I have that column for "Payment Method."

Then when it comes to tax time, I can total up the Amount column on the left side and know what to include as miscellaneous earnings. When added to the 1099s that I receive in the mail (I use those instead of the right side of my spreadsheet), that's my top line, gross income for gigging.

Another spreadsheet that I keep updated is for lessons. Every lesson that I teach gets listed, along with its date and the amount earned from it. You never get 1099s from private lessons - unless you're with some organization that handles the payments for you - but you do have to report them, even if you're paid in cash.

Depositing all those checks, however, brings us to Tip #2. So come back for the next article!