Musician

[Maggie]

Client is a professional musician and receives multiple w-2's and 1099's. Prior tax preparer took all expenses on Schedule C. Seems too aggressive to me. I was planning on allocating expenses between 2106 and Schedule C based on % of income to total. Thoughts?
Also, took business write off for massages and chiropractor. Seems like there would be a good argument for it being a business expense and not a medical expense? But not sure if this is out of line.
Income was earned in 6 different states. Am I correct in preparing 6 different state returns?
Any advice/suggestions would be appreciated!!
Thanks!!

[taxea]

Client is a professional musician and receives multiple w-2's and 1099's. Prior tax preparer took all expenses on Schedule C. Seems too aggressive to me. I was planning on allocating expenses between 2106 and Schedule C based on % of income to total. Thoughts?
Also, took business write off for massages and chiropractor. Seems like there would be a good argument for it being a business expense and not a medical expense? But not sure if this is out of line.
Income was earned in 6 different states. Am I correct in preparing 6 different state returns?
Any advice/suggestions would be appreciated!!
Thanks!!

you are correct to allocated the expenses between W2 and Sch C income. Massages and chiropractor are not expenses under any circumstances. Yes you prepare 6 state returns if the income was sufficient in each state to require a return being filed.

[TAXNJ]

Watch out

Client is a professional musician and receives multiple w-2's and 1099's. Prior tax preparer took all expenses on Schedule C. Seems too aggressive to me. I was planning on allocating expenses between 2106 and Schedule C based on % of income to total. Thoughts?
Also, took business write off for massages and chiropractor. Seems like there would be a good argument for it being a business expense and not a medical expense? But not sure if this is out of line.
Income was earned in 6 different states. Am I correct in preparing 6 different state returns?
Any advice/suggestions would be appreciated!!
Thanks!!

If client has a schedule A, consider the massages and chiropractor expenses if approved by a medical professional (reference Sch. A medical expenses)

[Gretel]

...agreed. Proration of expenses might need to be looked at by at what job incurred. There is a chance that expenses for 1099 income were different then for W-2's. Not likely for a musician but possible.

[TAXNJ]

Missed

Also, took business write off for massages and chiropractor. Seems like there would be a good argument for it being a business expense and not a medical expense? But not sure if this is out of line.
!

What would the argument be?

Thanks

[Maggie]

The musician states that the massages and chiro. are necessary to keep their body in performance condition. Posture needs to be correct, and muscles need to be kept loose.

[TAXNJ]

Also

The musician states that the massages and chiro. are necessary to keep their body in performance condition. Posture needs to be correct, and muscles need to be kept loose.

You might have something here.

Think that would definitely also apply to the Tax profession and other professions. Doctors are always telling us posture needs to be correct, and muscles need to be kept loose. Would the argument have a dollar limit or threshold and limited
to only musicians ?

Where would it be classified on the Schedule C ?

[Burke]

Yeah, they always try to justify it. Forget it, no business deduction, but might be medical. How about anger management classes for us? I like that one. Or meditation, yoga and the like. We need a calm demeanor.

[kamckinley]

You might have something here.

Think that would definitely also apply to the Tax profession and other professions. Doctors are always telling us posture needs to be correct, and muscles need to be kept loose.

I was just going to say the same thing. I have spent a ton on chiro fees this year, would love to be able to deduct against my business income! Don't think it would fly though

[Snaggletooth]

Aggressive Proration of Expenses

I suppose I differ greatly from most of the opinions offered here. Since the IRS is already disallowing by requiring miscellaneous deductions to be subject to 2% (in addition to requiring itemization threshold to begin with), I like to fight back. I don't feel constrained to prorate based on income.

Whereas I will not deduct on a schedule C those expenses that are strictly held against W-2 income, I will take liberties by deducting on a schedule C certain minimum expenses that would be ordinary and necessary to give rise to self-employment income.

A couple of examples might help. If the musician had to buy his own instruments to become capable of 1099-MISC income, I would take depreciation entirely against Sch C. If the musician pays dues to a union in order to become capable of 1099 income, I would take all the dues against Sch C. If the source of W-2 income was directly germane to an expense(such as a travel stipend on his W-2), then that portion of expenses would be allocated to the 2106.

I would not skew the allocation to ridiculous levels so as to make a Sch C presentation ridiculous.

As usual, some of the purists will differ with me, but this is what I do, and if audited I would maintain the same position.

And yes, going to the spa or choirpractice is not a deduction anywhere. The guy is full of crap -- like many of my clients who stretch the imagination to ridiculous levels.

[Gretel]

I full heartily agree with Snag. Splitting the expenses 50/50, no questions asked, is as wrong as taking all expenses against the 1099 income. It needs to reflect true life and what actually happened.

[Burke]

OP indicated she wanted to pro-rate on % of income. This is perfectly acceptable if it cannot be strictly allocated to one or the other (W-2 vs. Sche C), and this method has passed audit scrutiny.

[Maggie]

thank you

Thanks for all of your suggestions. TP wasn't happy about not taking all of the expenses against Sch C, so went back to their prior accountant.

[Burke]

Don'tcha just luv it! But you did the right thing. Prior accountant is off-base if he did not.

[TAXNJ]

Your gain

After that you deserve a massage or chiropractic session. Make sure it is doctor prescribed in case you need it for your schedule A