Saturday, April 4, 2009

Buying Gear

It's tax season here in the U.S., and most of us self-employed artists are tearing our hair out trying to sort through piles of receipts and cancelled checks. If you bought a lot of musical equipment last year, you might be congratulating yourself in anticipation of the advantage you will gain from writing off all of that gear on your tax return. It's important to realize, however, that the cost of that equipment is only partially offset by reduced taxes. Those equipment costs simply reduce the amount of your Net Business Profit, which in turn is taxed at whatever tax bracket you fall in. So if you're in the 15% tax bracket and you buy a $100 piece of equipment, your tax bill will be reduced by only $15. You didn't really think that Uncle Sam was going to completely subsidize that fancy leather gig bag that you splurged on, did you? I'm not sure how other countries treat equipment purchases for tax purposes, but I suspect it's similar in many cases.

So did you really need all of those new instruments and stage clothes you bought last year? Perhaps you did. This is one area in which I'm not quite as ruthless a cost cutter as in other areas of my life. I figure that as a full time musician, I spend a lot of time with my instruments, so having nice equipment makes a big difference in my quality of life. Also, I owe it to my clients to create the best sound possible; and the basic equipment costs that a musician bears are still relatively inexpensive compared to startup costs of, say, a restaurant business.

But it's important not to get carried away with this mentality. Don't kid yourself into thinking that the tax write-off makes it okay to go hog wild with equipment purchases. You are ultimately paying for all of that stuff with money that could have otherwise been invested for your future. Also, don't forget that most musical equipment depreciates in value fairly rapidly. Very few instruments actually increase in value over time. And above all, it's important to keep in mind that what really counts most is in your fingers and in your creative skills, not in some shiny new piece of gear.

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