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I have a full-time job. I also work as a freelance musician playing for local theaters. One of the theaters I work for is in another city and they gave me a W-2 for the ~$1000 I made in 2020. According to the IRS website, I am able to deduct travel expenses if I'm self-employed https://www.irs.gov/taxtopics/tc511. But, according to this article https://axioshr.com/w2-vs-1099/, the fact that they gave me a W-2 automatically classifies me as an employee and I am not allowed to deduct travel expenses. I believe they are wrong to give me a W-2 as I don't think I am an employee of the organization. I bring all of my own gear, do my job, and leave. Each gig is agreed to individually and I am not expected to work a certain number of hours.

This is a hobby for me which usually costs me more money than I make, so the deductions really help out when I can take advantage of them. Is it still possible to somehow deduct my travel expenses over the year to and from these gigs? Should I ask them to provide me a 1099 for 2020 and/or in the future so that I can deduct these expenses going forward?

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  • Not sure which answer to comment this on so I'm putting it on the question - as someone who used to employ numerous musicians (from hobbyists to full-on pros) as IC's via 1099, it's insane to me that this venue had you fill out a W4 and is paying you as an employee. It's definitely disadvantageous to you and them both. You should for sure talk to them about it. As far as deductability, I think it's dumb to limit yourself becaues you "consider" it a hobby. If you have to declare the income, you should write off the expenses. But that's my opinion.
    – Alex M
    Mar 16, 2021 at 0:55
  • If the OP is in California, a lot of entities hiring musicians started treating them as employees because of AB5, though there's now a broader exception in place that makes it easier to engage them as contractors once again in some circumstances. I wouldn't be surprised if the theater feared misclassification, or received legal advice to that effect, and started treating musicians as employees. Mar 16, 2021 at 5:45

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In order to deduct travel (and other expenses), you would have to classify this as a legitimate business. In this case, even if you did get a 1099, you would still not be able to deduct expenses because you consider it a hobby. See IRS topic here.

Not only would it be easier for them to declare you a 1099 contractor, but much less expensive. I am very surprised they are paying you under a W2. The pay you receive costs them quite a bit more in payroll fees and government taxes. There are many rules to reclassifying an employee and the venue may be unwilling to do so. In fact, you may have been hired as a W-2 because of some issues they had in the past with worker classification. You will have to talk to them about it.

There are ways to get around all this if you are willing to potentially tangle with the IRS. However, I will leave that to you to discover and it probably is not wise. A different way to look at this is you make money at a hobby you love and enjoy. Compare this to a mediocre golfer who spends money on lessons, greens fees, and gear. For most, it is a total outflow.

Now lets say you do want to open a business in the town in which you play. It could be music related (like giving lessons prior/after your gigs); or not, like IT consulting with client meetings before or after your gigs. You could deduct travel expenses to those locales, which also puts you close to the venue where you are to perform. That would be acceptable provided those businesses met the litmus tests for being a business concern.

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    I had no idea about the job vs. hobby distinction. Thanks for sharing that. Of course I wish could make a profit from it ... that's just how it is. But I think that's your point. The fact that I am willing to play the gigs and not rely on the income makes it a hobby. Mar 15, 2021 at 20:13
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Did you fill out a W-4 (employee) for the venue, or a W-9 (contractor)? I.e. how did the venue get your SSN?

It may be easiest just to change your status going forward. Inform the venue that you prefer to be a contractor, and provide a W-9.

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  • I filled out a W-4 at the beginning of the year. I admit I wasn't thinking what that meant at the time. Mar 15, 2021 at 17:20
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    "Inform the venue that you prefer to be a contractor" -- and negotiate an increase in gross pay to offset the payroll taxes that OP will now be responsible for instead of the venue, right?
    – nanoman
    Mar 16, 2021 at 1:32

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