Is Your Music a Business or Hobby? What the IRS Really Wants to Know | Tax Deductions For Recording Artists .

As music creators, we often pour ouro hearts (and wallets) into our craft without thinking about the business side. But here’s the truth: the difference between treating your music as a business versus a hobby could save you thousands in tax deductions.

I know this firsthand. As a recording engineer working with hundreds of artists at Studio 1515 in Wilmington, North Carolina, I see the same pattern over and over—artists constantly spending, spending, spending on their music, yet seemingly getting no financial return. Studio time, beats, marketing, travel—it all adds up. And most artists don’t even realize they could be writing off some of these expenses.

When I was doing my own taxes and claiming my deductions as an engineer, I had a moment of realization: What about the artists? Are they allowed to deduct their costs? Are they missing out on money they could be saving? That curiosity led me down a rabbit hole of research, and what I found was eye-opening. Yes, recording artists can claim deductions—if they treat their music as a business.

That’s why I feel it’s important to share this information, not just with the artists who come through my studio, but with musicians worldwide who could be leaving money on the table without even knowing it.

The Million-Dollar Question: Business or Hobby?

The IRS doesn’t care about your streaming numbers or how fire your latest track is. They care about one thing: Are you treating your music as a legitimate business? This distinction is crucial because:

• Business: You can deduct expenses (even if you’re not profitable yet).

• Hobby: You’ll pay taxes on all income AND can’t write off any costs.

Too many artists are unknowingly putting themselves in the hobby category simply because they haven’t set up their careers the right way on paper. But the truth is, if you’re spending money on your music consistently, you’re probably already running a business—you just need to prove it.

The IRS’s 9-Point Test: Are You Running a Real Business? (1-4)

To qualify as a business, you need to show you’re serious about making money. Here’s how the IRS evaluates your music career:

1. Profit Motive

You need to show you’re actively trying to make money through:

• Streaming platform presence

• Publishing organization registration (ASCAP, BMI)

• YouTube channel monetization

• Merch sales, live performances, or other revenue streams

2. Professional Expertise

Demonstrate your commitment through:

• Income proof (1099 forms, invoices)

• Marketing efforts (social media, website, EPKs)

• Equipment investments

• Ongoing education (mixing courses, production workshops)

3. Time Investment

Regular work on your craft counts, including:

• Studio sessions

• Show bookings

• Social media management

• Content creation

4. Track Record

While profitability helps, you don’t need to be making money yet. The key is showing consistent effort and a professional approach. ( Full 9 points available in the link below)

My Realization: Artists Are Leaving Money on the Table

Too many artists treat their careers like a passion project without realizing they’re actually running a business. And that’s a problem because it means they’re missing out on legitimate tax deductions.

I’ve seen artists spend thousands on studio time, beats, travel, and promotions—money that could be written off if they structured their careers properly. That’s why I started looking into this topic in the first place. If I, as a recording engineer, could claim deductions for my work in the studio, why shouldn’t artists be able to do the same for their investments in their music?

The answer is: They absolutely can. But only if they structure their careers correctly.

Real-World Success Story

Consider Alex, a bedroom producer who transformed his hobby into a legitimate business by:

• Opening a dedicated business bank account

• Documenting 200+ hours of studio time

• Investing in professional development

The result? He successfully claimed $8,300 in deductions his first year, even though he hadn’t made a huge profit yet.

🚩🚩Red Flags to Avoid

Don’t fall into these traps:

• No profit after 5+ years without justification

• Mixing personal and business expenses

• Inconsistent effort in your music career

If the IRS thinks you’re not serious about making money, they’ll classify your music as a hobby—and that means no deductions.👎🏾👎🏼👎

Taking Action: Your Next Steps

If you’re spending money on your music, you should be treating it as a business. Here’s how to start:

1. Open a business bank account to separate your personal and music expenses.

2. Create a simple business plan outlining your goals and revenue streams.

3. Start tracking every hour and dollar invested in your music.

The Bottom Line

You might already qualify for tax deductions without realizing it. The key isn’t about “gaming the system” but rather understanding how to document and structure your career properly.

This information isn’t just theory—it’s something I’ve personally thought about as an engineer watching artists invest everything into their music. Doing things the right way from the start can set you up for long-term success.

Don’t leave money on the table by treating your serious music career as just a hobby.

J Reese - Studio 1515

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"Your music is a business, start saving like one 💰 Wrote this guide after realizing how many of us were missing out on legit tax deductions. Everything I wish someone told me when I started. No fluff, just facts.🎧"

https://www.1515universe.com/product-page/tax-deductions-for-recording-artists