Whether you are a professional musician or just enjoy making melodies, music lessons can help you hone your skills. As you approach this year’s income tax deadline, you might ask, “Can I deduct the cost of my music lessons?” The short answer is, “Probably not.” However, some circumstances allow you to justify writing off this expense on your tax return.
Generally, Music Lessons Are Not Tax-Deductible
As a general rule, the Internal Revenue Service (IRS) views music lessons as part of maintaining a hobby. If you pay for lessons to improve your musical performance, you can’t write off those costs if you don’t turn a profit. If you sing in the church choir or meet with your mandolin group every Monday night but don’t earn a living from it, it’s just a hobby.
Medical or Special Needs
Music lessons count as tax-deductible medical expenses if they benefit a child with special needs or a medical condition. To qualify, a therapist or medical provider has to confirm that the lessons help treat or address a behavioral or medical problem. Such instances include clarinet lessons to correct a child’s overbite or psychological improvements for children with learning disabilities.
Some adults can deduct music lessons if they meet requirements for a medical or therapeutic necessity. However, promoting a person’s overall health does not justify writing off the lessons.
Although you generally cannot deduct music lessons on your federal tax return, your state might allow it under specific conditions. Check your state’s treasury department for any allowances. You can also consult a certified public accountant (CPA) or qualified tax preparer in your area. Remember that state tax laws can change often.
Music as a Business
When your music hobby becomes a business venture, the tax rules change. If you profit from your musical pursuits, you can likely deduct your music lessons at tax time. Typically, you can write off the cost up to the amount of your income. For example, if a local pub books you for weekly performances, you may write off what you paid for music lessons to offset your income from playing paid gigs.
When the government sees your musical pursuit as a business, it is essential that you think and act like a business owner. Because making music often comes off as a hobby, you can show that you are legitimately in business.
Start a company
Consider establishing an “enterprise” through which all your music-related expenses and income flow. For instance, you can create a corporation or limited liability company (LLC). Another option is to start a partnership with another musician.
Demonstrate that music lessons are crucial for your craft
Show that you require music instruction to maintain your current salary and preserve the skills you need to make a living. However, if it looks like music lessons help you meet minimal requirements for your profession, you will not be able to write off the costs.
Keep personal and business accounts separate
Set up a bank account and possibly a credit card for handling all money related to your business. Doing so makes it easier to track all expenses and show a profit. A different business account also helps you trace and verify expenditures for tax purposes.
Although music lessons are not generally tax-deductible, there are circumstances when you might be able to write off those expenses. You can know for sure by consulting a tax preparer or CPA who understands the rapidly changing laws in your state.