Balancing Tax Season as an actress
By Jen Berry
Note: A Balancing Actress Collaborative and its affiliates are not tax professionals
**If you have any questions or concerns regarding your taxes, always consult a tax professional.**
As tax season rolls around, as an actor, it can be confusing. You may be wondering just how to file, what items and expenses are deductible and if you are considered a contractor or an employee.
Qualifying as a Performing Artist for tax purposes
To start with, one must qualify as a performing artist in order to make any claims on your tax returns as such. Qualification means you must prove that your business is legitimate and makes money and not something you occasionally do as a hobby for fun.
According to an article on backstage.net The Actors Guide to Filing taxes in the U.S. by Angela Anderson, “The IRS allows artists four years to earn a profit. If you don’t earn a profit on your artistic activities after the first four years, the IRS may decide that what you do is simply a hobby. Your deductions may be limited to the amount of your income from those activities.”
Employee or Contractor?
So say you are a legitimate business and make money as an artist. The next important question is are you an employee or are you a contractor? In 2018 the rules changed, in order to claim tax deductions you must be a contractor (meaning you get a 1099 and are considered an LLC or S or C corp. If you are an employee (meaning you get a W2), according to the article Deductions for Actors by Stephen Fishman, J.D. on Nolo.com
“The ability of actors classified as employees to deduct their ordinary and necessary job-related expenses (listed above) is strictly limited under the TCJA. Prior to 2018, employee-actors were permitted to deduct their unreimbursed acting expenses as an itemized personal deduction on IRS Schedule A. These business-related expenses were deductible only if, and to the extent, they exceeded 2% of the employee’s adjusted gross income (AGI). For example, an actor whose AGI was $100,000 and had $20,000 in unreimbursed expenses could deduct $18,000 (2% of $100,000 = $2,000).
The TCJA completely eliminates the deduction for unreimbursed employee expenses for 2018 through 2025. This means, for example, that an employee-actor who spends $20,000 out of his or her own pocket on business-related expenses during 2018 through 2025 will not be able to deduct the expense.”
In other words, you must be a contractor in order to claim any deductions you have related to business expenses.
Deductions
So you are a contractor and want to know what expenses are deductible? For the IRS, all deductible business expenses are those that are:
Incurred in connection with your trade, business, or profession
Must be "ordinary" and "necessary"
Must "NOT be lavish or extravagant under the circumstances"
If you are considered self-employed then the following are some of the things you may write off. (However you must be able to prove that they are in relation to your business.)
Travel: Specifically for your Acting business. This includes plane tickets, ground transportation, gas mileage, hotels etc). This means you can deduct things like travel to and from auditions, to classes and to set.
Union dues: Dues for SAG-AFTRA
Agent & Manager fees: All fees an actor pays to an Agent and/or Talent managers.
Classes: Acting classes, coaching, dialect classes, voice classes etc.
Promotional expenses: Headshots, Reels, websites, postcards and business cards.
Some Wardrobe: Clothing that is used only for business (ie an alien or fairy costume).
Subscriptions: magazines, subscriptions to casting websites etc. You can also deduct streaming subscription services like Netflix and Amazon Prime Movies as they are considered research and necessary to keep abreast of what is happening in the industry.
Legal: Attorney Fees
Professional: Fees for accountants, consultants etc.
Office expenses: An outside or home office ONLY used for an acting business as well as the cost of equipment. Things like video cameras, sound and lighting equipment, backdrops books on acting, computers and phones.
Other things you can write off: workshops, vocal classes. Makeup, hair and nails. Meals bought while obtaining career advice from a union actor (someone you have a clear business relationship with.) If you are also a theatre actor you can write off tickets to shows as it is also considered research like a streaming subscription.
Misconceptions on deductions
A gym membership, even if it is for a role or you were told you need to lose 10lbs, is considered a personal expense and is not deductible.
If you talk to someone about acting over a meal, the meal is not deductible.
Not all clothing is deductible. In order to be considered deductible, clothing must not be usable for streetwear (ie clothing for headshots or a business suit). The exception to this is dancewear.
Hair, make-up and nails (as related to your business) may be deducted but only once. Upkeep of your look is not deductible.
Keep Good Records
To maximize your tax deductions, the most important thing you can do is keep detailed records. Save all your receipts, maintain mileage logs for your car, and track every business-related expense. There are many apps available that can help you track your expenses throughout the year, making tax time much easier.
Consult with a Tax Professional
While these tips can help you get started, it’s a good idea to consult with a tax professional who specializes in working with artists and freelancers. Every actor’s situation is different, and a tax professional can help ensure you’re taking full advantage of the deductions available to you while avoiding any potential pitfalls. They are also more up to date with any new Federal and state regulations.
Final Thoughts
Understanding what you can and cannot write off as a working actress can be tricky, but with the right knowledge and organization, you can significantly reduce your tax burden. Keep in mind that staying on top of your taxes isn’t just about avoiding trouble with the IRS—it’s about treating your acting career like the business it is. With the right deductions and smart financial planning, you’ll be better equipped to sustain and grow your career for the long haul.
Remember all items that you deduct must relate to your business and it is imperative you keep good notes and all receipts on your expenses.
You are your own business, so get into the habit of treating yourself as such and when in doubt always ask a tax professional for guidance on your taxes.
Remember, taxes don’t have to be overwhelming. With careful planning and an eye for detail, you can ensure that you’re getting the most out of every deduction while staying compliant with state and federal regulations
