If you're making a decent living in radio, you're probably paying a decent amount of taxes. If you pay someone 50 bucks to fill out your short form, you're probably still paying a decent amount of taxes, taxes you probably don't owe. We aren't big enough yet to have an IRS agent write for us (and we aren't sure we'd want one), but we were able to locate the infamous, the one and only, the original Raoul the Taxman. He knows radio, he's been on the radio, and he knows his tax stuff; and for a bottle of tequila a month, he agreed to pass on a few tax tips for us radio types. We're excited to present Raoul's debut column in this month's issue and urge you to read between all the lines.
And now, please welcome, a man who needs no shot glass: Raoul the Taxman!
Ole', you poor taxpaying stiffs, and greetings from Raoul The Taxman. My amigo, Geraldo, is so thrilled that I've kept him out of the slammer for so many years, he has actually begged me to share my vast wealth of tax tips with the subscribers and friends of RAP. I tried to explain to him that this will be no easy task. As a matter of fact, it may be just as difficult as robbing a train with an old horse (which, as he knows, is the reason I'm in the tax business in the first place).
Listen to me, man. Taxes are confusing, complicated, negative, and boring; but forget it, because we are going to make it fun. Fat chance. So don't kill the messenger. There are things we all deal with in life that are a lot worse than taxes. For instance, having a nail in your head. Watch for this column next month and maybe I'll think of another one.
What RAP and Raoul will be sharing with you through the coming months are tax tips that we hope will be of interest specifically to people in the field of broadcast production. We'll be talking about various everyday tax laws that can be applied to the unique aspects of your business, and maybe save you some big pesos.
In this issue, I'd like to talk with you about depreciation. This is the process of taking tax deductions against your income for the purchase of audio equipment. Although we all have stereos, cassette players, etc. for recreational purposes, they are also tools of your trade. Square Sol and his stiff doll can't write this stuff off, but you guys can! With new technology and new products coming out every day, I'm sure many of you are upgrading your equipment. Turntables, synthesizers, tape decks, amps, CD players, upgraded car stereos, speakers, everything, man. You can write it off! You people are in the sound business!
Now listen up, gringos and gringas, keep records of receipts. You can't write off this stuff if you steal it, or even if it just accidentally falls off the back of a truck into the trunk of your ride, man.
If you've never written off your equipment, but have acquired a considerable amount of hardware over the years, you're not up the Rio Grande. Go back and reconstruct your purchases. Take an inventory of your equipment and locate your receipts. You can set the original cost up as an asset and depreciate it. This applies not only to you guys scamming some outside freelance income, but also to you stiffs on salary in a production studio.
As I said, depreciation can be a complicated concept. We will explore it in more detail next month; but taking an inventory of what you've got is a good place to start. Basically, and dependent on various situations, you can write this stuff off immediately or over 5 years. We'll get into that, but in the meantime, your assignment for this month is to read IRS form 4562 and its instructions. It's really a pisser. They are available at any IRS office; but when you go down there, remember to wear a disguise -- a wig or fake mustache will do just fine. Also, a little limp would be a tasty touch. And please, don't mention my name!