As an actor, your income is likely sporadic and comes from a variety of different jobs. This can make tax season even more stressful, as you compile your various income reports and forms for the year. Here are the top 8 things you should know as you do your taxes this year (and every year to come!)
What Type of Worker Are You?
The taxes you are responsible for paying depend on the type of acting work you do, and who you do it through. If you are a contracted actor working through an agency, you will not have to pay the “self-employment tax.” This tax addition is for those who qualify or identify as “independently contracted” actors and includes taxes on social security and Medicare. The IRS encourages directors to hire actors as employees rather than independent contractors, so make sure you know what you are officially and legally hired as.
What Are You Taxed On?
Don’t forget that all your jobs require that you register your tax information—it is not uncommon for actors to have additional “survival jobs” to supplement their contracted acting work, (as acting can be an unfortunately inconsistent and unreliable schedule). Every job will require some sort of tax form to take advantage of tax breaks on the employer’s end as well, so keep track of those forms as they will help you when you are ready to file your taxes for the year. Besides your total income, any gifts or goods that come to you through your connections as an actor should be included in your tax forms at their market value.
What Can You Deduct?
There is a fairly impressive list of deductions that actors qualify for. As long as the expense ties directly to your acting jobs, it may be something you can write off in your taxes for the year. This list includes things like your payments to agents or lawyers, your travel expenses (including meals and overnight stays,) wardrobe and costume (if not provided by the job), and even things that you utilize for researching a character for your acting job (such as streaming services or subscriptions to materials).
Who Can You Get Help From?
It is never a bad idea to ask for help—in fact, it is often the wisest choice! The benefits of having an accounting advisor can make the money you pay for one worthwhile. Many people rely on CPAs (certified public accountants) or CFPs (certified financial planners) so that they can be confident they are filing their taxes correctly and taking full advantage of any tax benefits available to them. Especially when you do have multiple sources of income to juggle having an extra pair of eyes can give you that security of mind. Research the kinds of financial advisors available to you—for example, advisors who work on commission versus advisors who are paid with a one-time fee—and decide what financial help will be best for you, financially. (If at all possible, look for resources that have experience helping actors before! That is one added level of confidence your advisor may be able to offer you!)
What System of Organization Do You Have?
Keep track of things! Save yourself time and stress later by maintaining a system of online tracking for your taxes now. There are apps available through which you can photograph and store receipts electronically so that when the time comes for you to organize all this information it is at your fingertips. Routinely going through your receipts and bank statements and transferring them into electronic data will also relieve some of the frustrating clutter that piles up so quickly. As an actor, you are constantly dealing with financial exchanges, so create or find a reliable system to help you organize that data to help you out later.
Are You up to Date With the Latest Changes in Tax Policies?
Looking at your tax information from last year should be part of your tax routine; however, take the time to look into any updates on changes in tax policies for entertainment careers. There may be things you didn’t have to pay attention to before that are important now or things that might benefit you if you are aware of them!
Do You Qualify as a “Performing Artist”?
You may also qualify to claim status as a “performing artist”. This means that your acting is not simply a hobby but a career. you can prove that your acting is a hired role within a real business. The IRS will look at your income over a four-year period to determine the validity of this claim, that you are actually making money. Once that is verified, there is yet another list of deductions you can claim in your tax returns. This includes any marketing measures you have taken (promotional cards, portfolios, resumes), measures taken towards your improvement as a performer (lessons, tutoring), and any physical materials or resources you use frequently for your performances.
Have You Done Your Research?
One of the biggest mistakes that everyone makes year to year is their lack of attention and understanding of their taxes. Even with helpful advisory resources, an ear to the ground for changes, and a system of organization for your expenses and income, you may still feel like you don’t know what to do. Take the time to learn about what you need to be doing and why. This will prevent you from detrimental decisions and misunderstandings, and most importantly will help you take full advantage of the benefits you may qualify for in tax returns, rather than being taken advantage of by the systems you are responsible for paying taxes to.
Acting is a job that fulfills the passion and drives you forward in the arts and entertainment industry. As fulfilling as it is, it requires a lot of financial juggling. Utilize your resources and stay on top of your finances so that when tax season comes around, that “juggling” becomes a smooth and painless process.