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| FREE ~ Lite Version Seminar 10
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SEMINAR 10: HANDLING TAXES
Greetings!
Yes! You have finally made it to Part VII...The Income/Outcome!
The two main earmarks of this Part of the 7 point journey through
the music industry are "royalties" and "taxes."
So, before we jump into the handling taxes segment, a word or
two should be said about Royalties and Royalty Statements.
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We have seen throughout these seminar sessions, and especially
in the last seminar, that there are a lot of middlemen in this
business. And, since each middleman receives a royalty in payment
for his contribution to the exploitation of the song, there are
a lot of different types of royalties "floating" around.
A book could be written on all the intricacies of these various
royalties, but here, just an overview will be presented.
A royalty is the compensation paid by a party for the authorization
to use a right legally owned by another, e.g., a right in a copyright
or patent, or the right to merchandise one's personal image or
name, etc.. Some of the royalties that exist in the music business
include:
Songwriter Royalties
Song Royalties
Folio Royalty
Publisher Royalties
Artist Royalty
Producer Royalties
Statutory Royalty
Compulsory Royalty
Record Royalty
Mechanical Royalty
Multimedia Royalty
Cable Television (CATV) Royalty
Synchronization Royalty
Transcription Royalty
Print Royalty
Performance Royalty
Jukebox Royalty
Foreign Royalties
Here is where you will again need the SMP Membership Full Text Version of Seminar #10, along with the access it gives to the SMP Hot Links…you will find out how to "Take Care of Business" with detailed answers covering:
1) Royalty Statements…what
is stated in them and who sends them out to who when.
2) Record Sales…why
all Record Sales are not accounted for--Don't Get Burned!
3) Calculation
Formulas…how does one figure them out?
Royalties -- SMP Hot Link
You get all this and much more with the SMP Membership Full Text Version…
Go To SMP Membership Full Text Version -- Index List of All Seminars
Get Your SMP Membership Password Here!
INTRODUCTION TO HANDLING TAXES
Taxes -- SMP Hot Link
Yes, the good news is that your song has finally started making
money and you are receiving royalty payments! The bad new is that
the tax man commeth. So, you'll need to be ready to handle your
tax situation, or it could cost you ALL you have earned.
This discussion on taxes will follow the flowchart listed below
in the next heading section. The tax deductions listed in the
flow chart (preceded by the word "Less") are the five
general ways to lower the taxpayer's (your) TAXES DUE amount.
All tax deductions have certain qualifying restrictions and
some have amount deductible restrictions depending on the taxpayer's
particular tax situation. These restrictions are defined by tax
law. Questions on specific matters may be ascertained by contacting
an IRS Tax Information Center near you. Also, you may view/read
and/or download much information from the WWW…such
as Tax Calendars, Tax Publications and Tax Forms.
The main thing you, the taxpayer, must remember when dealing
with the IRS is that IRS representatives and IRS publications
INTERPRET the tax laws. These interpretations are sometimes biased
and may not be in the taxpayer's interest in that they are sometimes
contrary to the law as it is interpreted by the courts! Therefore,
information received from the IRS should be in writing and confirmed
by a competent tax attorney!
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Total income from all sources
Less Income exclusions
= GROSS INCOME
Gross Income
Less deductible adjustments to gross income
= ADJUSTED GROSS INCOME
Adjusted Gross Income
Less itemized deductions, or,
The standard deduction whichever is greater,
Less exemptions,
= TAXABLE INCOME
Tax on taxable income (from the tax table)
Plus any additional taxes owed,
Less total tax credit deductions,
= TOTAL TAXES DUE
All of the above entries proceeded by the word "Less"
are items that can lower your total taxes due amount. A general
outline listing and discussion of these items follow.
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Gross income is the total income received by a person or business,
but not to include income exclusions. Personal gross income includes
royalties, wages, salaries, tips, fees, commissions, bonuses,
or any other compensation of value received. The gross income
is figured on Form 1040.
It is possible, as a taxpayer, to realize income from many
different sources. For example, the taxpayer could be a carpenter
and have a savings account with $5,000 in it. The wages received
as a carpenter and interest paid by the bank on his savings are
both income and therefore must be reported. Another situation
might be that the taxpayer is a carpenter, has a $5,000 savings
account, and also has a side business of playing in a band on
the weekends. Income from all of these sources must be reported.
There is obviously an almost infinite number of combinations
from which a taxpayer could receive income. The sum of all these
receipts is called gross income.
INCOME EXCLUSIONS
Income exclusions are receipts that may be legally excluded
from gross income. The rules that must be met to allow an exclusion
are numerous and often involve special interest groups. For more
detailed information obtain Tax Publications #525, #54, #539,
#593, and #505 from any IRS office or download them from the WWW.
Here is where you will also need the SMP Membership Full Text Version of Seminar #10, along with the access it gives to the SMP Hot Links…you will find out how to "Take Care of Business" with detailed answers covering:
1) Adjustments
to Gross Income…what the 8 main deductions are--save
Big Money!
2) Music Businesses'
Expenses…lists scores of qualifying deductible expenses!
3) The Capital
Loss…what it is and where to report it.
4) The Adjustments
to Income Deduction…what it is and where to report
it.
5) Itemized
Deductions…what they are and when to deduct them.
6) The Standard
Deduction…thankfully this is not the only deduction
available!
7) Tax Exemptions…what
they are and where to find the current rates.
8) Taxable Income…what
it is and which tax publications you will need to figure it.
9) Tax Credits…what
they are and which tax publications explain qualifying credits.
10) Taxes Due…what
it is and which tax publications explain how to get it right.
Taxes -- SMP Hot Link
You get all this and much more with the SMP Membership Full Text Version…
Go To SMP Membership Full Text Version -- Index List of All Seminars
Get Your SMP Membership Password Here!
See you next seminar for the final session on taxes.
*R*
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