William Hunt  

Musicians and Home Office Tax Deductions

William Hunt
April 2, 2019

Editor's Abstract (Click to Hide)

Have you ever wondered whether you can deduct your practice room? Your teaching studio? What about the room where you use your computer to do your bookkeeping? Just in time for tax deadlines, violinist and Enrolled Agent Bill Hunt offers his professional advice about when you can and cannot take a home office deduction.

- Ann Drinan

Introduction

Many taxpayers question whether they can deduct a room or portion of their personal residence if they use that portion for business reasons. Frequently, the questions will be: “Can I take a deduction for our guest bedroom where I keep a computer to retrieve emails from work?” or “I do all my research for my school teaching job in my family room; can I take a deduction for this room?” or “I have to work evenings and weekends for my employer; I do this work in my study den at home. Can I take a deduction for this room?”

For musicians, the two questions most commonly asked are: “I teach private lessons in my home; can I take a deduction for this room?” and “I am a professional musician and must practice to maintain my skills; can I take a deduction for the room in my house that I use for practicing?” There are certainly other reasons for which musicians use parts of their homes for business purposes. However, for the purposes of this article, I will only address the private teaching studio and practice room situations.

Home office tests

The answer to whether a home office is deductible is not always simple, but the current rules for claiming a home office are fairly straight-forward. In order to claim a home office deduction, the home office area must be used regularly and exclusively:

As the principal place of business (including administrative use), As a place to meet with clients in the normal course of business, or In connection with the business, if it is a separate structure not attached to the taxpayer’s personal residence.

An additional requirement for an employee is that the area must also be used for the employer’s convenience.

Regular use means that the area used for business must be used on a continuing basis; occasional or incidental use does not meet the regular use test even if the area is used for no other purpose. Exclusive use means that the area is used for business purposes only. Exceptions to the exclusive use test are made for storage of inventory or product samples, and day care facilities.

Private music teaching studios

A musician who is self-employed teaching private music lessons in his/her home will be able to claim a home office deduction as long as the room (or portion of a room) satisfies the regular and exclusive use tests. If the room is also used to entertain guests, watch the television, or for any purpose that is not related to teaching the private lessons, the home office deduction will be disallowed. This is an example of a fairly straight-forward home office deduction.

Practice rooms for performing musicians: a brief history

For performing musicians the home office deduction can be more complex; over the past two decades the rules for claiming a home office deduction have also changed. Home office deductions for practice rooms have been disallowed by the IRS. The IRS reasoned that the principal place of business for a musician is the concert hall, which is provided by the employer. Because the employer was providing the “office” in the form of a concert hall, no deduction was allowed for the home practice room. However, a court decision involving a symphony musician went contrary to the IRS position. A home office deduction was allowed to the musician who was able to substantiate that:

  • S/he spent more time practicing in his/her home office than performing on location at the concert hall
  • Practicing was essential to maintain his/her skills to keep his/her position in the orchestra,
  • The orchestra did not provide a place for him/her to practice.

Therefore, the court ruled that the home practice room was the principal place of business by the simple fact that more time was spent there than in the concert hall. At this point it seemed that musicians employed by symphony orchestras could now claim the home office deduction for a practice room, at least until a rather famous court case in 1993.

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Comments (Click to Hide)

many of the orchestras in which i play now have contract clauses specifying that the musician is required to provide his or her own practice facilities away from the employer's premises; i think this is supposed to help establish the "employer's convenience"
pattiviola on July 14, 2019 at 5:59 PM
For how many years can disallowed home expenses be carried forward?
drharlee on February 10, 2019 at 6:06 PM
Generally, unallowed home office expenses carry forward until you sell the home. Perhaps the greater concern is that it is good to show a profit for a sole proprietor in at least 3 of every 5 years. With disallowed home office expense carry forwards, there would not be profit shown on the return for some amount of consecutive years.
bhunt on February 23, 2019 at 12:49 PM

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