H1-B W2 employee + 1099 music royalties. What are my options about deductions?

[NickFelix]

Hi,

I'm under an H1-B visa.

I received a W2 from my employer. I'm in Music.

But I also received a 1099-MISC and 1099-NEC from past jobs (pre H1-B). That are music royalties for licensing of my music.

My question is: Can I deduct any music software, musical instruments, microphones, etc.. from my 1099s? As they are passive income even if both my W2 and 1099 are kind of the same jobs.

I wouldn't want to double deduct thing and get an audit.

[MaryM428]

The IRS considers royalties to be active income.

In TurboTax you will be able to enter your expenses for the 1099-NEC, but not for the royalties.  If the royalities are reported on box 2 of the 1099-MISC then expenses will not be taken for them.

Because you are on a H1-B visa, you will do your taxes with Intuit's partner for nonresidents, Sprintax.

[NickFelix]

Thank you!

I'm actually a resident.

[npierson7]

Yes, you can deduct software and mics, as well as supplies and licenses cost. As for the musical instruments, you will have to set them as business assets and take depreciation deduction. Depreciation is the method of deducting expenses that have a useful life of more than one year. The useful life of musical instruments is seven years for depreciation purposes. 

[NickFelix]

Than you for the answers.

I actually didn't deduct anything as all my expenses were related to my H1-B and not my 1099s (which are royalties for work I did years ago). If I did I would have deduct my expenses twice.

[npierson7]

If you  received the Forms 1099(s) for 2020, you can deduct the expenses. However, if your current work is W-2, it doesn't make much sense to take the depreciation expenses, since you won't be able to deduct it in future years.