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Financial Planning / Tax Strategies
|Subject: Re: Deductions for a second job||Date: 8/14/2001 12:16 AM|
|Author: taxprof||Number: 53315 of 119697|
If I work as a musician but it's not my regular full-time job, can I deduct any equipment that I buy?
Probably not. If the equipment can last more than a year you will have to depreciate the $5k over the life of the equipment ( 3 or 5 years depending on the type of equipment). There is a way to "expense" the $5K, but see the answer to your next question.
If so, let's say I purchase $5,000.00 worth of equipment but the first year I only earn $1,000.00. Is there a limit to the amount I can deduct? Also, is there a minimum amount that I would have to earn to take any deductions?
You can use section 179 to expense the equipment, but your deduction would be limited to the amount of income. You couldn't use it to create a loss, only reduce income from music to $0.
Calculations for depreciation can be complicated. See a tax professional.
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