Actors’ Tax Guide for 2020 Tax Season
As an actor, taxes may be the last thing you want to think about – just leave it alone and it will all go away!
As the tax deadline gets closer, it can become a source of stress and there is always a lot to think about with tax (there are literally tens of thousands of pages of the tax code) – below we’ve made it simple and you have a good place to start your return.
Income for Actors
Professional actors are often employees, especially under Equity contracts and you will receive a W-2, normally with federal, state and local taxes deducted at source.
For self-employed work you will normally receive a 1099-MISC – you may receive many throughout the year, you just keep them safe and then they are ready once you make a start on the return.
If you have any other income, where you didn’t receive a W-2 or 1099-MISC, that will still need to be reported on the return. Even if someone swapped services with you or gave you some free products, the market value will need to be included as income.
If you did a job and you don’t have a 1099-MISC, it’s fine to go back and ask them if they have a copy for you.
Deductions for Actors
Everything changed from 2018 (more details below), so these expenses are just for your self-employed income. If you have expenses for your W-2 income, you will need to keep a separate record for those.
Actors are in the lucky position that you can claim for many items that most people can’t. Always, you just need to make sure that the expenses are directly related to your work and that they are “ordinary and necessary” (not super expensive and extravagant). Having said that, what is ordinary and necessary will often depend on your income and what level you are at – if you are famous you may need to pay extra for privacy, which may be seen as extravagant, but in reality is necessary for you to work.
Agent and manager fees – all the fees you pay to your agent and manager
Hair and make-up – when you incur the cost for a specific job or audition
Wardrobe – the general rule is that it’s clothing purely for the role and there will be no personal use
Travel – you are allowed to claim all costs of overnight travel (flights, Uber, trains, buses/coaches, hotels, Airbnb, tips, dry-cleaning and laundry). For local travel, you can include trips to casting, auditions, performances, acting classes and other direct business appointments
Meals – for overnight trips, fine to claim for meals. You can also claim if you meet your agent, business manager, other cast members or for any other direct business matter – for meals, you always claim 50% in the tax return. If you are on the road, the IRS does have a per diem meal allowance that can be useful if you are not great at keeping receipts/records
Vehicle expenses – you can either claim for mileage, where you keep a record of the distances for work, or you can claim actual costs of using the vehicle and you will need to have records of the cost of the vehicle, gas, repairs and insurance
Research – actors need to keep up with the industry and you can claim for film and play tickets, Netflix, HBO, Apple TV and other streaming services
Subscriptions – union dues, magazines, journals, online sites such as Backstage.com
Legal and professional fees – attorneys, accountants and other professionals
Equipment – this covers any physical item that has a life of more than one year, normally a laptop, iPad, phone, video and sound equipment
Use of home – the main rule is that you must have a room (or rooms) that you use exclusively for work, if there is mixed use then you can’t claim the room. You can claim mortgage interest, rent, gas, water, electricity, real estate taxes, insurance and repairs. To calculate the percentage of those costs to claim, you look at the square foot of the work area and compare that to the total square foot of the property.
Changes to claiming actor expenses for tax
The main change for actors for last year (2018 return) and now when you prepare your 2019 tax return, is that if you received a W-2 for acting work, you won’t be allowed to claim your work expenses for that work.
There is an exemption if your total income for the year (employed, self-employed and any other income) is $16,000 or less. You will also need to be able to show that:
- You worked as a performer for at least two employers in the year
- Received at least $200 in wages from each of the two employers
- Had expenses of 10% or more of your income as a performer
If you can meet the criteria, you can claim the Qualifying Performing Artist Deduction and claim all your acting expenses.
If you have self-employed income as an actor (1099-MISC), you will still be able to claim your work expenses. If you have a mix of W-2s and 1099s, then we suggest keeping the expenses separate and you can then clearly show what is allowable.
Possible relief in 2020
In June 2019, a bill was placed before Congress for the problem to be corrected and enable actors to claim expenses for their employed income. The Performing Artist Tax Parity Act would allow single actors earning up to $100,000 and married filing jointly actors earning up to $200,000 to claim expenses and reduce the additional taxes.
That bill is still in progress and actors unions SAG-AFTRA and The Actors’ Equity Association are treating it as a top priority for 2020.
If it is something you want to show support for, you can contact your US Representative in Congress.
Tips
If you are receiving your acting income via a W-2, you could consider setting up a “loan out” corporation. This simple step will allow you to continue claiming all your work expenses for your acting work and claim tax deductions.
Any questions
We are very happy to help with any questions and we can run through how to file your actor tax return. Our friendly team of IRS Enrolled Agents have specialized actor tax preparation experience to help actors in New York, California and across the US and walk you through what the next steps are – contact us today.