Are any of you self employed and writing off travel expenses? I've had an LLC set up for years that I run all of my music-related business through and I kind of want to try expensing a "writing and recording retreat" in Europe. Anyone done something like this? My cursory research suggests that you can count a trip as a business expense as long as you work for a certain amount of the trip, but I've seen conflicting thresholds.
depends on jurisdiction anon
here in bongland travel can be expensed if it is "wholly and exclusively" for business reasons. i have an accountant for my ltd co and a few emails where I ask her "I want to go here for X reason, is it permitted?" as a paper trail. I have the kind of business where pictures of me doing stuff overseas can legitimately be called marketing so usually the answer is yes, it is permitted.
what tends not to be is long stays where the justifiable bit is not closely bookended by travel to/from airports and unduly luxurious things like staying in five star hotels. You don't have to go for the cheapest possible option but you're meant to at least pretend to be careful with a buck. The tax authorities also publish not too stingy per diem rates you can use instead of keeping receipts if you prefer.
one thing I have seen is digital nomads trying this. That doesn't work. His Majesty's Revenue and Customs say you could do that from home so you don't get to expense any of it. Dunno if other tax authorities are more lenient.
I'm in the US, and international travel is maybe the only thing I haven't successfully expensed with my LLC yet. I've been in other bands who have bought plane tickets and lodging for European tours, which all counted as business expenses, but part of me feels like that seems more legitimate because it's not just one person
Solo musicians are allowed to do overseas tours. If you can sell tickets to come see you do mongolian throat singing or whatever it is you do then you should be able to expense associated costs.
What about writing and recording, where there are no tickets to be sold? I feel like it would be legitimate for a band to book a trip abroad to work on new music, but I'm unsure of where that falls on the spectrum of expenses
oops meant for
I mean I write all kinds of stuff off, it's great. Plus I get to make my own schedule and I don't have to call some pencilneck tech brah my boss. That's partly what inspired me to look into this, I don't even have to ask anyone if I'm allowed to take the time off
sounds reasonable enough to me. spending money to produce something that will later be sold is the very definition of a business expense. but I'm not whoever your tax authority is and they can be really anal about stuff for no good reason. (HMRC brought and lost a massive court case about whether something sold and taxed as a cake was really a more lucrative biscuit).
I mean can you phone up your tax department and ask them?
I could probably get in touch with the IRS, I've had generally good communications with them in the past but I wouldn't expect them to move very quickly
>meeting notes, emails logging your activities to associates, etc.
What if it's literally just me, though? Would it make sense to craft schedules and meeting notes just for myself, if what I'm doing is writing and recording songs? I guess it's not too farfetched to imagine setting up some "networking" meetings with local musicians, or finding a studio or venue I could "intern" with for a few days
>What if it's literally just me, though?
Doesn't matter at all. Imagine your LLC was a full service musical agency and you were an employee. If you went to Europe to research music and spend some time working on tracks, you'd obviously expense that to the company. Well, it's exactly the same if your company is just you.
It helps to have some people that you can send notes or documents to.
>I guess it's not too farfetched to imagine setting up some "networking" meetings with local musicians,
Yep. Record the notes like they're business meetings and also log your thank-you emails.
>or finding a studio or venue I could "intern" with for a few days
You don't even have to intern, just treat it like a research trip, go, write down some notes. It seems like a lot of work, but if you get audited five years from now you will be glad for all the backup.
Yes, there's no requirement as far as flying economy or business. Just be careful as deducting a bunch of travel is more likely to get you flagged for an audit.
Interesting, I do have some musician friends who I could send notes and demos to if needed. I asked a friend about this idea and he asked "how much would you actually save by expensing the trip instead of just doing it yourself? $300?" and he's kind of right - am I just reading too much into the idea? Is it even worth it if I'm not going to save a ton of money?
Also, do audits really happen five years later? What a pain in the ass trying to dig up records from five years ago
>self employed and want writeoffs
I'd rather just work tech and have my employer pay for me to travel and dick around
Yes anon, you absolutely can. As always, it's best to consult with a CPA or tax attorney on this.
So just a few things —
>research and creative inspiration
If you have a music LLC you can absolutely write off a music trip to Europe, just keep records of everything you did. Assume that you will need to defend it to an IRS auditor one day. I mean schedules, receipts, meeting notes, emails logging your activities to associates, etc.
I run an adventure travel side business, and go on 1-2 adventure travel trips per year that I write off —they are competitive research, after all. I take notes and send them to my business partner, and document all expenses of course.
>networking and business development
If you can manage to set up some pitch meetings for your business during your trip, it's now a networking trip and a legitimate business expense. You can't write off the whole week of course, but certainly the flights and a few nights of lodging.
Example: you're visiting friends, your friend works at a company that could be a potential client. You grab lunch with some of his colleagues, discuss your company, and then send a follow up thank you note for the meeting. Now you can write off the flights as a business development expense.
>s- and c-corp
Down the road, you can set up as an s-corp and have an annual meeting for your employees that can be anywhere in the world. As long as you conduct some official business, you can write off the ENTIRE thing. Including dinners, entertainment, etc.
This is where you really want a CPA involved though.
This works but sorta invites trouble. The IRS is well aware that people will try to create an LLC in order to engage in what they consider a hobby and then write off the spending on that hobby.
There's guidelines on the hobby vs. business activity distinction and there's probably some that are specific to the music industry. You can deduct anything that you think is justifiable but its on you to prove that it was for business purposes. The bottom line is they consider businesses things where your intention is clearly to make a profit and activities you deduct should somehow relate to that aim.
I'd expect that traveling to anywhere you're paid to perform definitely counts but it gets tricky when you are doing something that's only tangentially related to selling music of performances like visiting the Stradivarius violin museum. That probably wouldn't count. Simply communicating with another musician trip might not fly either but travel to a recording studio would I think be acceptable.
If photography is involved in your music (i.e. album art) you may be able to deduct travel to locations where the photographs were taken.
The IRS has 3 years to audit you from the date you file a return (technically up to April 15 if you file before) but in practice, they seem to notify people from about 3 months to a year and a half after filing. They can also audit you indefinitely if you're discovered to be cheating on your taxes by a substantial amount, it seems to be around 1/3 of your income that you're not paying taxes on and should be, in practice where they do that.
Okay that's understandable. What if I bring my own recording equipment? So essentially, the plane tickets and accommodations are just to get me into a different space that becomes the "recording studio" for the purpose of the trip. The photography thing is a good point though
That probably isn't enough. Although, visiting another musician might work, a lot of people have studio grade setups at home now if you guys were to collaborate on something together and needed to practice I guess. But be prepared to defend yourself in an audit if you expense a lot of stuff and don't make any money. If you are making a lot of money its less suspicious to rack up big expense bills.
A good tax accountant btw is worth his weight in gold. Find one that has dealt with the IRS enough and who is willing to straight up say "this is how much you can get away with."
So, I'm starting a travel channel on YouTube. If I fly only business class (which I do) can I write it off? USA anon.
Idk the US rules, you need to check with your bookkeeper/lawyer/advisors. BUT in my country the rule would be: the trip is necessary for your work. The easiest way to prove that would be to include the business class flight in one of your youtube videos, maybe a quick review of it. The catch is that many airlines hate this, and you actually have to invest time to make sure the airline is happy for you to film. (If you're filming yourself, nobody tends to care, but as soon as the flight attendants or fellow passengers get into the frame it can get more complicated, so either don't get anybody else in the frame at all, or ask for written persmission in advance.) Again, these are not the US guidelines, so look up your country's laws. Btw the trip counts also necessary for work over here if you go to work meeting or training or whatever.