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Touring and State Tax Withholding: A Crash Course for Musicians

Did you know that various states require promoters to withhold tax from your performance income if you are not a resident of that state? If you answered “No,” you could be in for surprise when you receive $100 less for your performance than you thought you’d get. Below is a list of applicable states and their withholding rates and requirements at the time of this writing:

California: 7%
Connecticut: 6.5% if income is over $1,000
Massachusetts: 5.3% if income for the calendar year exceeds $5,000
Minnesota: 2%
Missouri: 2%
New Mexico: 5%
North Carolina: 4% if income for the calendar year exceeds $1,500
Ohio: 2%
South Carolina: 2%
Wisconsin: 6%

Fortunately, in some states, you can fill out forms to reduce this withholding. If you’re performing in California, Massachusetts, or Connecticut, and you’re not a resident (or your band’s company was not organized or incorporated in that state), then you can fill out a Form 589, Form PWH-RH, or Form CT-588 for the respective state to apply for reduced taxes on your performance income. For each form, you fill out your information as the performer, as well as that of the withholding agent (usually the promoter). You don’t need to worry about getting the withholding agent’s tax ID, as the state will send the agent the form to fill it in.

You’ll also be required to list all budgeted income and expenses, as your net income will be a factor in determining how much you’ll be taxed. Some types of expenses will end up accruing extra taxes, so if you know or work with a business manager or accountant, it is best to check with him or her on how to best handle this.

If you are a resident of one of the withholding states listed above (or if your company was organized or incorporated through one of them), you are most likely eligible to waive any tax on your performance income there. Check with your state’s department of revenue (DOR) for instructions on how to do so. For Connecticut, even if you are not a resident, you can fill out Form CT-590 to waive your withholding if you expect your gross income earned in that state not to exceed $3,000 for the calendar year. For Massachusetts and North Carolina (listed above), the DOR and withholding agent are supposed to automatically keep track of your yearly income, so no forms need to be filled out.

One more thing to note is that some states, such as Massachusetts, have excise taxes in addition to the normal entertainer withholding. It’s always a good idea to check with any states you’re performing in if this applies to you.

Reducing state withholding tax can get complicated and messy at times, so it’s usually best to let a business manager, accountant, or even knowledgeable tour manager handle it for you. However, as an artist, it’s at least useful to know which states will tax you, so that you won’t have any unexpected losses come time to settle with the promoter.

Disclosure: The purpose of this article is to foster an open dialogue and not to establish firm policies or best practices. Needless to say, this is not a substitute for legal and accounting advice. In any particular case, you should consult with lawyers, accountants, or other professionals experienced in the field you are in and licensed within your state. Depending on your specific situation, answers other than those outlined in this blog may be appropriate.

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