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Music Students: To File or Not To File?

Author: Brad Howland
First Posted: October, 2000

Students are pretty busy, and income tax is probably the last thing on their minds. However, there are good reasons for filing a properly prepared tax return while in school, even if you are not required to pay tax.

Consider filing if you have any self-employment income while attending school. You can deduct expenses against that income and create a business loss (see above). You then carry the loss back and deduct it against income in the three preceding years. The amount left over can be carried forward and used in the next 15 years.

You will also be able to claim depreciation on "capital" equipment you purchase. Capital items are not used up right away, but last more than a year. For example, musicians can claim depreciation on sheet music, recordings, stereo equipment, and instruments. You probably won't need these expenses while attending school, but you can get them on record to write off against future income. Even if you don't file a tax return, you should store all receipts for capital property. When you do start earning money as a musician, these items will be converted to business use and written off. Believe me, some day you will be glad you saved them!

If you work and pay tax while attending school, and have equipment purchases, consider not claiming the section 179 deduction. Rather than writing off the full amount of your equipment costs in the early years when income is low, you may be better off waiting until income is higher, converting to business use, and using one of the depreciation methods to spread the expense out over several years.

Of course, you should take advantage of the new tax benefits for higher education. They include a deduction for interest paid on student loans (line 24 of Form 1040), the Hope Credit, and the Lifetime Learning Credit. Additional information and examples can be found in IRS Publication 970, Tax Benefits for Higher Education.


The information on this website, and the use of this website, are both provided without warranty of any kind. Income tax rules change every year and some information may be out of date. All readers wishing to take advantage of the information offered here should consult a qualified income tax preparer. In no event will Brad Howland, Howland Tax Services, or this website be liable for any damages, including lost profits, arising out of the information offered on this website, or the usage of this website. All material on this website Copyright © 2001-2017 by Howland Tax Services, Inc. Please contact us for permission to use this material in any form. Website designed and maintained by Brad Howland.