MusicianTax/SpecialtyTax FAQ'S
written by Donnie Castleman, Enrolled Agent

    1. Question: What are your qualifications?
        Answer:  I started studying tax law in 1986 at the same time I started playing music full-time to be able to file my own tax returns. Fast-forwarding to 1992, some friends called me frantically to prepare their tax returns, and my tax business was started. I went back to college and got a second degree in accounting and started learning as much as possible about tax law and expanding my tax clientele. By the time I left Nashville for Las Vegas in 2001, my tax clientele was over 150. In the years I've been in Vegas my business has almost doubled in size, handling tax returns for people all over the United States. I recently became an Enrolled Agent, which allows me to completely represent tax clients before the Internal Revenue Service and in U.S. Tax Court. I'm also a Notary Public and Authorized E-File Provider, and am on my way to becoming a CPA, and an Authorized E-File Provider. While it's nice to have a lot of "official" qualifications, my main qualification is a passion when it comes to helping people in their tax situations, and being accessible to my tax clients at all times. I ask many questions to make sure things aren't missed, and keep my prices competitive enough to keep people coming back year after year while keeping my business profitable.

      2. Question: Why should I use you as a tax professional? What can you offer that I can't get with do-it-yourself tax preparation software or national chains?
            Answer: Along with my professional qualifications, and spending hundreds of hours each year to stay current with the rapidly changing tax laws, I consider myself as an extra set of eyes and ears when it comes to preparing a return. Most people do have a good general knowledge of filing their taxes, but by doing it themselves, they could possibly be cheating themselves out of missed deductions that could lower their tax liability or get them an even bigger refund. For example, in the entertainment industry, bands almost always use a producer to make a recording as he has the ability to make sure that things are working, and can make corrections and adjustments to make the best record possible. Just the same as the greatest athletes and musicians in the world always have a great coach or instructor, I think it is paramount that taxpayers have someone looking out for their best interest concerning their taxes, which is what I do. I have opportunities to look at the leading do-it-yourself tax software occasionally, and while I can say that most people that work a regular job could DO their return with it, the software doesn't have the ability to ask real questions or achieve different tax strategies. And also, I'm not too fond of patronizing the national chains for tax preparation for two reasons. One, the person you go to from year to year will almost always be different unless you go to their higher end preparers that are Enrolled Agents and CPA's. Two, when you go to one of these chains, you run the risk of getting someone brand-new working for low money that is simply doing what the computer tells them to do without no real working knowledge of tax law. I know that out of personal experience, as a place wanted to hire me when I first started out for $5 an hour. I honestly don't believe that people working for $5 an hour have the qualifications to be in charge of people's tax returns. Occasionally the good preparers will stay on for many years and make more money, but 90% of people that the chains hire will ultimately quit. Because of reasons such as these, I am a huge advocate of licensing requirements for ANYONE that handles the filing of someone's tax return. I believe someone's finances is every bit as important as their health and spirituality, You've heard the saying that everyone needs 3 things; A good doctor, a good priest, and a good accountant. I firmly believe that tax preparation is a very personal and private thing and you really need the same person looking at your return year after year that you trust wholeheartedly.

    3. Question: I have an old car that I just want to get rid of. Should I just donate it to Opportunity Village or some charity?
          Answer: While I am all for someone helping out a charity, this is NOT the way to do it. The IRS changed the tax law to only let you claim a deduction for what the charity actually GOT for your car. The charity has no real interest in getting top dollar for your car, so if they get $100 for your vehicle with a blue book value of $5,000 at an auction, you're only allowed to write off $100 off your tax return. This may not be intentional on the part of the charity, but nevertheless it's what happens. If you want to really help out a charity with your old car, sell it outright to someone and then give the money to the charity. My heart sinks when I see commercial after commercial begging for old cars, and by the time people figure out what has happened, it's too late. This trend started out with good intentions but abuse of the system left the IRS with no choice but to tighten the reins of what deduction to allow taxpayers. Please don't donate your car and allow it to be auctioned off for a low price!

 

     3. Question: I am in another state. Are you able to prepare my state return and efile it along with my federal return?
          Answer: Believe it or not, 75% of my clientele are out-of-state. This would not have been possible years ago but with the advent of email, fax and scanning, I can offer nationwide tax return filing and in a lot of cases do a completely paperless return, sending your return to you in PDF format to your email box upon completion. I am also an Authorized E-file Provider, authorized to e-file federal returns and all state returns, from New York to California and everywhere in-between.

 

      4. Question: Can you explain mileage and what miles can be deducted on a musician's return?
          Answer: Mileage is written off in lieu of actual vehicle expenses, and with the exception of huge equipment trucks and vans, I've rarely seen circumstances where writing off actual expenses was better than the mileage deduction. You may also write off your tolls and parking when using the mileage rate. Taxpayers should make an honest effort to keep a log of their deductible mileage, mainly writing down where they were going and the miles round trip to get there. If you have a regular job whether it be a music job or a "regular" job. These miles are classified as "commuting" miles and may not be deducted from your tax return. Deductible miles always include all "support" miles driven to out-of-town jobs, music stores, office supply stores, bars to do the "schmooze" thing, and the airport. Where it gets tricky is miles to other gigs around town. If an in-town job is temporary such as a convention, these miles are deductible. If you're jumping around subbing at different venues all the time while additionally working at a regular job (venue), these miles are deductible. The only time that mileage would NOT be deductible is if it is an ongoing job that you reasonably expect to play at for longer than a year per the IRS's definition of a "temporary job location". I use the general rule that if you play at a place more than 30 days in a year, the miles aren't deductible as it is a regular place of employment. If you play at a venue less than 30 days in a year, go ahead and write off the miles. Bear in mind that your in-town mileage to gigs is under the presupposition that you additionally have a "regular" place of employment be it a regular job or steady music gig. If you have no regular place of employment, the IRS will call your entire metropolitan location your "regular" place of employment and will disallow any in-town mileage. However, mileage to "support" locations such as music stores and electronic stores will always be deductible.

    

      5. Question: What are the advantages of E-filing a return?
          Answer: When you e-file a return, you effectively eliminate many of the possible errors concerning the return, including name and social security number and information on W-2's. When an e-filed return is rejected by the IRS, you can fix it and send it again within just a few minutes, whereas if you had sent it by mail, it would take over 2 weeks to figure out that a prevalent error was on the return. E-filing confirms that your return has been received by the IRS, and cuts down the amount of time between filing the return and receiving your refund. In my experience, to file a paper return and get a check in the mail takes 5-6 weeks, while to e-file a return and get your refund electronically takes 7-10 days. And, you're saving postage! This question leads me to the next question.....

 

      6. Question: Why are you so opposed to Refund Anticipation Loans (RAL's)?
          Answer: I can't possibly be the only person in the world that realizes what a rip-off "cash advance" stores are, and tax preparation chains that offer this service are equally unethical. When you use a leading chain that charges hundreds of dollars in junk fees (YOUR MONEY) to get YOUR MONEY to you in 3-5 days. If you read question 5, you saw that a properly e-filed return with direct deposit takes 7-10 days. You're telling me you're willing to pay a place $200-$500 of YOUR MONEY to get YOUR MONEY 4 days earlier? Please! These places are making a killing marketing these slime-ball products, not to the rich and wealthy, but to the poor, the lower-middle class, and single-parent households that don't realize what a mistake they're making. Without going into detail, just take a look by Google'ing  Refund Anticipation Loans together to see the millions of dollars the chains have had to pay in penalties from deceiving the public. In my opinion, these places are more concerned with signing people up for one of their bank products (what RAL's are called within the industry, a more politically correct term than BOLD FACED RIPOFF!) than preparing an honest return, as they make way more money selling them. And, in my opinion, if you're having to guard yourself from slime-ball tactics like this, why would you consider doing business with them? Oh yeah, the chains offer generous commissions to their preparers to sign people up to this crap. This is EXACTLY why I do not offer these services, as I have to look myself in the mirror every morning and at least tolerate what I see.

 p.s. I'm using "chains" in place of HRB and JH for legal reasons, but you can surely figure out who I'm referring to.

 

         7. Question: I live in (LA, New York, Florida, Texas, Hawaii, Kansas). Can you do my return and file the state tax return for me?
          Answer: I have tax clients in 17 states at this point, and am more than happy to electronically file your state return, as I'm an Authorized E-file Provider for Federal and all State returns.

 

        8. Question; I owe the government big-time and need to do an offer in compromise, should I use JK Harris, Innovative Tax Strategies, or Roni Deutch?
          Answer: How about NONE OF THE ABOVE! I have yet to hear ONE good story from using any of these ethically challenged companies! The first thing that happens is that they get your information, and a huge up-front check in the amount of $3,000-$8,000 to handle your tax situation. Then they conveniently forget about you as soon as they get that check in hand. And, from year to year they blame YOU for not getting all the information to them, including tax returns, tax information and letters from the IRS. Whatever lame excuse they can come up with to send you off the phone is what they will tell you. I believe that a government intervention is long overdue to shut these companies down, as they prey on people in financial trouble way more than the cash loan stores and pawn shops. If you want to do an offer in compromise with the IRS and are sincere about getting on the right track, get with a real CPA or Enrolled Agent that really knows what they are doing, and while their services won't be cheap, they'll be way less than the fees that the so-called tax resolution companies charge. If you need names, I have them, as this is not something I do a lot of from being busy with other things.

 7. Question: I deduct the standard per diem rate when I'm traveling. Should I keep food receipts?
   Answer: Keep everything related to your travels to be able to prove to a Nazi-style IRS auditor that you were indeed out of town in the stated cities and that you did have to spend money to eat, i.e., meals weren't provided. I've seen an IRS auditor try to disallow all business meals out of town because coffee and donuts were provided for breakfast at the hotel, so just keep all receipts just in case.