Today we’re talking about deductions on our taxes from all the various expenses we, music therapists, have. To put this in easier terms, what things can we write off at the end of the year when we file our taxes? The things we buy (the money we spend) for our music therapy business will balance out with the income we bring in (money we make). Our income, which we are taxed on, will be held up against the money we spend. Essentially, whatever we have to pay in taxes (for our music therapy business, contracts, private practice, sole proprietorship, etc.) will decrease with what we buy throughout the year for our business.

This is something I have been learning throughout the years as I work with my accountant to do everything I need to do, to the best of my ability, at tax time. I am no expert! I have, however, gained some insight along the way when it comes to music therapy business things. And I’ve been happy to see a return on my taxes every single year that I’ve been a music therapy business owner. It feels much better to make money back [because I attended several CMTEs and such] instead of having to pay back in to the government. I don’t know what this means business-wise (am I spending too much? am I not making enough?). Who knows! I suppose a business guru would, but this has worked for me thus far!

I want to show you exactly what I deduct at tax time to help you figure out more items you can count as expenses too. There are also spreadsheets you can purchase to make your life easier when it comes to tracking these!

Music Therapist, What Expenses can you have as Deductions for Taxes?

Get ready for a long blog post!

You can also listen to this on Not Your Average Music Therapist podcast, episode 30.

marketing

We’re starting here because one of the very first things we may do as business owners is buy business cards… or tell people about ourselves in some sort of way via marketing! I lump marketing and advertising together as one, by the way. I see them as one and the same thing.

Business cards
Pamphlets
Printouts
Signs
Event Table props
Flyers
Graphic Design services
Social Media expenses
Table cloth for event table
Cost to be a Vendor or have a Booth at a conference
Any ad in the newspaper, magazine, online, etc.
Stamps for mailing out ads

Business Meals/Meetings

I have since changed the name of this category from what I originally had because it’s confusing! My accountant told me that I can deduct part of the meals that I pay for when it’s a business meeting. This means that every coffee date I have with another music therapist, lunch with a potential music therapy advocate, dinner with a business partner or coach, networking meetings over food I keep track of here.

Professional music therapy

I had no idea what to name the category with all the official music therapy business items, so this is what I came up with! Professional Music Therapy. What’s included in this category is all those professional things you may think of, such as the following:

Certification and/or License (CBMT for me) dues
AMTA Membership
Any other membership related to your business (like Not Your Average Music Therapist Community!)
DBA (Doing Business As form filed with my state/county) for my business name
Liability Insurance
Accounting
Legal fees

professional development

This is exactly what you think it is! All of our continuing education, hooray! What that has looked like for me is the following:

CMTEs (Continuing Music Therapy Education) credits
Music Therapy Conferences
Other professional Conference (outside of music therapy)
Music Therapy Courses and Webinars
Books to help me grow as a music therapist, better serve my clients, succeed in business
Concerts (think about your music education improving from these!)
Traditional Education from a college or university (this may need to be a separate section)

Session equipment

I have since simplified the name of this category because you get the idea. Anything you directly use in session belongs here. Just bought an iPad and you primarily use it for songs, music apps, and a guitar tuner? Yes! That is certainly session equipment. Here are some other ideas.

Guitar
Percussion instruments (shakers, hand drums, frame drums, mallets, rhythm sticks, etc)
Keyboard
Guitar strings
Sheet music you have to purchase
White board used in sessions
Printing service for printing out visual aids
Cart/wagon/bag for carrying instruments
Guitar capo, tuner, picks
Microphone/amplification
Adaptive equipment to make sessions more accessible
New guitar case
Scarves for sessions
Bluetooth speaker
Music apps used in sessions
Subscription to programs used in sessions (Spotify, Youtube, etc.)

office supplies

Enough said, right? But think deeply about all the things you buy for your office. Of course pens, paper, stapler (do we still need these?), post it notes, etc. But also your office desk and chair, filing cabinet, garbage can, bins for instrument inventory, fan in the corner of the room, and the like. This category and list items can change depending on where your work location is and what’s in it. Maybe you have a music therapy space that you rent or an office that is also a music therapy session room. Think about these things when gathering your list of expenses!

online programs

Another one renamed! This is a good catch-all name for all those things you use online.

Website Platform (Squarespace, Wordpress, Weebly, Wix, etc.) …I use Squarespace and I love it, if you’re wondering!
Website (Domain) Name
Email address (if you pay for it at-your-website.com)
Email services (Mail Chimp, Squarespace email, Flodesk, ConvertKit, Maillerlite - what I use!)
Extra storage space for Google Drive or Apple for all my business documents
Apps I use for running my business

office rent

Since my office is within my apartment, I can deduct a percentage of my monthly apartment rent. The same percent of my apartment that I specifically use for my business. I’ve estimated that I use about 12% of my apartment for my office (just a small space within my bedroom). Because of this, I can deduct 12% from my apartment rent amount to find the amount to list on my expense sheet. I hope that makes sense! I’m sure this also applies to house mortgage in one way or another, but I’d defer to a tax professional on this one!

If you have a rented session space, deduct that rent.

If you rent an office space outside of your home, deduct that cost.

I think you get the idea!

Utilities are included in my rent, otherwise that may be another category with a similar percent! Again, defer to the tax professionals.

phone

Similar to deducting part of your apartment rent for your office space, we can deduct part of our phone bill. I don’t pay a second phone bill for my business (I only have one phone!), so I have a percentage created for my phone bill for this category. Because my life is pretty split between personal and professional, I deduct 50% of my phone bill for my business.

internet

Same thing here. What percent of your internet do you think you use for your business? Think about all that time you spend emailing clients, researching music therapy in different settings, looking up local places that could benefit from music therapy, posting about your business on social media. Also think about this in relation to the time you spend watching Netflix or mindlessly scrolling Instagram, which I am sure are not business expenses! 😂

mileage

Last, but certainly not least, is mileage. My accountant brought up that we can either count all car expenses OR track mileage. And her professional opinion was to track mileage. So, I trusted the tax professional. 😉

Mileage is SO important to track as we get so much back for every mile we drive! For 2021 it is 56 cents per mile. So if we do the math, that’s $56 for every 100 miles we drive. Lots of money back!!

Because I work at my home office, I track my mileage FROM MY HOME [OFFICE] TO MY CLIENT’S RESIDENCE AND BACK. Did I need to put that in all caps and bold “and back?” I don’t know. I just think it’s that important 😁

My mileage tracking is so lengthy that I created an entirely separate spreadsheet for it. (If you’re purchasing the spreadsheets… you’re welcome! The total adds up for you!)

Simple questions to ask

When we think about all these expenses, and the possibilities of more, the common denominator is this: What are we spending our money on for our music therapy businesses? It’s as simple as that. Ask yourself these questions to help you figure it out!

Is this purchase for my business?
Will I use it in my business?
Am I spending this to get more clients?
Am I having this meeting to network or make more referrals?
Does this impact my business?
Do I need this to run music therapy sessions?
How much of my time on my phone, computer, internet, etc. am I using for my business?
Is this directly correlated to my business?
Is this service I’m paying for helping my business?

I will keep you updated…

…if I learn any new thing about taxes, expenses, deductions, what have you! I will add to this blog post, talk about it on the podcast, or create another spreadsheet to lay it all out. We’re in this together!

And if you don’t yet have an organized way of keeping track of expenses…

i am sharing my spreadsheets!

I have had so many hangouts with music therapists the last several years - my friends, my peers, students, and those interested in starting businesses - and this is the one thing I bring up in every meeting! Spreadsheets. It’s because I made a big mistake my first year in business (when I didn’t realize that me contracting with an agency was in essence me owning and running a business) by not tracking my income, expenses, and mileage. I had no idea that what I was making directly related to how much I would have to pay in taxes. Call me naive, but no one taught me anything about being anything but an employee filling out a W4 and receiving a W4 for taxes. It’s all different when you contract (not as a W4 employee) and are considered a business owner! I want to help you avoid making the same mistake that I did.

You can very easily create these spreadsheets yourself. It’s not rocket science! But, it is time consuming. So, if you believe that your time is valuable (valuable enough to cost you money), then save yourself a few hours (hours that could be used in session, marketing, finding new leads, or just resting!) and buy these super inexpensive spreadsheets. I’m a music therapists too, so I priced these out at a price that I would feel comfortable paying as a new music therapist. This is literally not about me making money (remember, you can make it yourself!), but I would love to be compensated for the time over the years I spent consulting with my accountant (and paying for the meetings), time creating these sheets and editing (editing will likely continue!), and marketing these simple sheets to you (hello photo shoot with pretty Trader Joe’s flowers and this blog post which has been several hours of my night). ☺️

I am so, so happy to have these spreadsheets out in the world, especially for all those MTs I promised!

You can find them here, or click the picture below.

P.S. Save money on the spreadsheets by joining the Not Your Average Music Therapist Community!!

Happy expense tracking!

One more tip - try to do this often throughout the year as to not give yourself so much work right around April. Another suggestion, file your taxes quarterly so you’re forced to keep track regularly!