Estimating Death & Taxes

I didn’t spend much time in the library over my four years at Drexel, but I have an unfortunate memory etched into my brain from one afternoon there during my senior year. It was April 2015, days before my birthday, which is typically three days before Tax Day. (If you were wondering, I celebrated the first anniversary of my 23rd birthday last week). At the time, I owned a business (Bad Timing Records), ran PropertyOfZack, and worked for both Synergy Artist Management and Jade Tree. I was not raking it in by any means, but I had a lot going on work-wise without any idea how to handle taxes for it. I was disorganized and uninformed, and had to spent a boatload of money to get my taxes done in a rush. I didn’t want that to happen again.

I work several different jobs in the music industry. I deal with getting paid in different ways for my services and also deal with paying people in different ways for their services. The type of job may vary widely, but I’ve learned some little habits over time to make my life easier when it comes to Tax Day, both for myself and for the businesses I’m involved with. Some of those things took me years to figure out, but now I have a little bit of a playbook when it comes to dealing with the government this time of year. Some of this (or maybe all!) may be useless to my dozens of subscribers, but for anyone interested in managing a band, running a record label, starting a business, or becoming an independent contractor, this advice is for you.

  • W9s When Running a Business: Every time you pay someone for work, whether it’s $1 or $600, request a W9 form from them. It will be your burden at the end of the year to create 1099 forms based off W9s for each person/LLC (not S-Corps) you paid $600 or more to. Moreover, these 1099s will usually be due to the IRS a few months before Tax Day itself. Be ahead the curve so when the deadline comes around, you’re not scrambling to collect W9s from freelance workers that will take a month to reply to you because they’re busy (and also allergic to taxes). And on that note, keep a Google sheet or Excel document of every person you have paid from your company in a calendar year, and update it each month so you can keep track of when or if 1099s will be need to be created.
  • Estimated Taxes (🤢): At the end of each month, I pay estimated taxes (1040ES to be exact) through the IRS website’s Direct Pay feature. Doing anything digitally when it comes to the government feels like a breeze rather than going by physical mail. Most 1099 or freelance workers that pay estimated taxes do this quarterly, which is super okay -- I just personally want money that “isn’t mine” out of my bank account as soon as possible.
  • Organization: I maintain Dropbox folders titled 2015_Taxes, 2016_Taxes, and so on. Within a specific year’s folder, I keep records of each estimated payment made so when handing my taxes off to my accountant, there’s a clear paper trail of the money that’s already been paid toward my tax burden. I similarly keep records of each 1099 I receive from employers as they are sent for tax filings.
  • Apps: I work with an accountant throughout the year to make sure I’m on track for my taxes and deductions, but I also use apps as well. I highly recommend Mint for personal budgeting and as a way to mark transactions into categories for future tax reasons. If you’re an independent or 1099’d worker, I highly recommend Intuit’s Self-Employed app -- it’s a Tinder like interface for handling your personal and business expenses, and can then do your taxes for you.

Tax Day has passed for most of us, except me. I filed an extension, which makes me the perfect candidate to wax poetic to you about matters pertaining to the IRS. If you were wondering why this newsletter was a day late this week, it's because I realized too late that it wasn't exactly riveting to write a breakdown on taxes.