Actors Tax Season – Changes and Tips

As the second in the series of common questions that our clients ask, clients often ask what are the changes for actors after the Tax Cuts and Jobs Act.

For actors, as with the whole of the US, they were promised lower taxes by President Trump in 2017 – he said “your paychecks are going way up and your taxes are going way down”.

The Tax Cuts and Jobs Act came in to force for the 2018 tax return, it was announced as the biggest tax cuts and reforms in American history.

While 65% of individuals are now saving tax, there are 6% of people who are paying more tax and many actors are now in this group.

Changes to claiming actor expenses for tax

The main change for actors between 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.

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.