Business Expenses, Tax Tips, and Record Keeping
WHENEVER POSSIBLE, GET AND KEEP RECEIPTS!
Ideally, the most reliable documentation for all expenses and purchases is a receipt with:
- the name and address of the vendor or service provider,
- the date of purchase or service provided,
- an itemized description of the purchase or service provided
- When a detailed receipt is not available, get any information you can as described above.
- In this instance always scan for a digital record.
Keep your receipts separated by type of expense or type of income. You can put each type of business expense or income receipt in a separate envelope, accordion file, or digital file.
Keep all Income contracts, pay stubs, and all other statements of income
Transportation Tax Tips
There are many expenses that you do not get a receipt for and need to be documented in the appropriate record forms. Public Transportation is one of those major areas. If you buy a monthly subway, bus or train pass there is no documentation for when you use this for business or personal purposes. That’s where you record keeping comes in. Below are examples of transportation expenses that are tax deductions. Taxi and car service cost usually can be documented with receipts as well as car rentals. Transportation expenses to and from related to seeking employment are deductible.
- meetings with agents
- classes, coachings
- rehearsals for professional performances and showcases for which you are not paid
- AEA, SAG, AFTRA, etc. to check call boards
- offices to pick up scripts, audition sides, etc.
- vendors to pick up pictures and resumes
- business meals
- post office for professional mailings
- tax consultant
Transportation to and from W2 paid jobs IN-TOWN are not deductible. If you travel from one job to another in the same day, transportation from the first job to the second is deductible. For example, if after performing in a Broadway show you travel directly to perform in a night club, the cost of that trip is tax deductible. But the taxi home from your night club job is not deductible. If you own a car and use it for business purposes, keep track of these expenses and mileage in the Business Expenses section, automobile.
BUSINESS EXPENSES TAX TIPS
Accompanist & Audition Expenses
All fees associated with audition prep are deductible. Common Expenses include: Audition accompanist, computer music transcriptions and arrangements, vocal audition book supplies.
All advertising and promotional expenses related to finding work, getting an agent , career promotion ,etc. are deductible. Typical deductions for the theatre artist are: pictures, resumes, post cards, photographer, photocopies, press kits, theatre tickets for agents, website, IMDB,social media ads, press agent, etc.
You have two methods of deducting the costs of operating a car for business purposes. 1 - Deduct the actual operating costs incurred during business trips (gas, oil, tires, repairs, rental and leasing fees, etc). 2 - Use the IRS flat mileage allowance. See Business Expenses section, automobile chart . At the end of the year, your tax preparer will use this information to obtain the largest deduction.
Agents & Manager Commissions & fees
List here all commissions and fees paid to agents and managers. Keep on file any letter from agents and managers explaining the nature of the services and your contracts.
Business entertainment costs are deductible when meetings, business meals, etc. are held solely for the purpose of getting work or representation. However, if you are employed as an employee or as an independent contractor you can deduct the cost of production meetings held in connection with your employment. Cast parties, open houses for the profession, etc . are not deductible expenses, unless you can prove they are held to promote business. Each receipt must document information about projects discussed, people present at meetings, their titles and business affiliations, date, location, etc . For meetings at home, keep receipts for groceries, caterer, liquor, etc.
Theatre tickets can be deducted as a business entertainment expense only if the show attended directly relates to business discussed at a meeting preceding or following the show. See Tickets-Research for additional deduction info.
Business entertainment and meal expenses are only 50% deductible.
Document each business gift with an original receipt . The IRS limits deductions for business gifts to one $25 gift per recipient per year.
Classes, Coachings and Lessons
All professional instruction, coaching, dance classes, etc. necessary to maintain and improve skills as a theatre artist are deductible. We recommend you keep names, addresses and business cards of all instructors. The IRS may question the validity of receipts without this additional documentation. Some theatrical tax preparers send photocopies of all receipts for classes and instructions and the names and addresses of instructors and schools right along with the income tax return. Typical deductions in this category for the theatre artist are: acting, dance, voice, speech, dialects, career consultations, etc.
Costumes, Dancewear, Cleaning & Repairs
Theatrical COSTUMES are deductible. However, CLOTHING is not automatically deductible, even if purchased specifically for theatre work or to wear at auditions. If it can be worn for day-to-day activities it is not considered a costume and cannot be deducted. Dance clothes are deductible. However, if you deduct the cost of dance clothes you may be asked to present evidence of having attended dance class or performed using these clothes. Cleaning expenses and repairs for theatrical costumes is deductible.
The cost of purchasing or renting equipment used for professional purposes is deductible, as are any related expenses, e.g., insurance, maintenance, etc. Keep equipment purchase expenses separate from equipment maintenance expenses. We have provided two columns on this chart for this purpose. Typical deductions in this category for the theatre artist are: recorders, piano, keyboards, piano tuning, stereo, self-tape equipment.
For large equipment purchases there are two methods for claiming deductions; deducting the total costs all in one year or a five-year depreciation method. This is something you and your tax preparer will decide.
Note: If equipment purchased or rented is for both personal and business use, you can only deduct the percentage that such equipment is used for business. Consult with your tax preparer. Examples are Smart phone usage to record and to self tape auditions.
Internet & Cable Expense
The percentage to which you use the internet and cable for documented business is deductible. These typical artist usages include: research Film/TV shows, Internet submissions for auditions, advertising, industry emails and contact research.
Legal and Accounting Fees
All legal and accounting fees related to the business are fully deductible. Typical deductions in this category for the theatre artist are: income tax preparation, contracts, lawyer fees, accountant fees, etc.
Make-up and Hair
Make-up and hair are only deductible when incurred expressly for a performance. Routine trips to the barber or beauty salon are NOT deductible. The IRS may question deductions in this area. Therefore, ask producers, directors, agents, etc., to put in writing their requests for changes of hair and specialized make-up. These written requests should have as much detail as possible including the name of the production and the dates performed, etc. Typical deductions in this category for the theatre artist are: theatrical make-up, audition make-up, requested hairstyle and color changes for a specific role. dressing room supplies, wigs, etc.
Expenses incurred for the purchase of office supplies used for business purposes are deductible. Typical deductions in this category for the theatre artist are: stationery, artists supplies, postage, bank charges, mailing envelopes,postage etc.
Production and Rehearsal Props
Expenses for rehearsal and production props are deductible when ever they are not reimbursed by producer.
Scripts, Books, Scores, Sheet Music
Materials purchased in preparation for roles and study to maintain and improve skills in the profession are deductible. Typical deductions in this category for the performing artist are: theatre books, records, tapes, violin strings, rosins, guitar picks, etc.
Stage Manager Supplies
These expenses for rehearsal and production preparation props are deductible when ever they are not reimbursed by producer. Typical expenses include: kit, blacks, tools, etc.
Expenses incurred for the rental of rehearsal studios and theatres are deductible. Typical expenses include: piano, cd player, chairs, lights, microphone, projector. Also deductible are related costs, e.g., janitor fees, electricity, etc.
The cost of an answering service outside of the home is fully deductible.
If you install a phone exclusively for business use, then all expenses relating to this phone, including installation and monthly fees, are deductible. If your phone, smart phone and answering machine are for both personal and business use, you can deduct the percentage for which you use them for business.
Once a typical deduction, tickets for research purposes are now a questionable deduction even if you are self-employed as an independent contractor. Common deductions in this category for the performing artist are: the cost of attending movies, plays, concerts, etc. to observe trends in the industry and to maintain and improve skills in the profession. To document these expenses, jot down date, location and business reasons for attendance. Consult your tax preparer for current IRS guidelines.
Tips to backstage personnel (dressers, doormen, etc.) are deductible.
Any publication with audition notices and/or information about the business is deductible. Typical examples include: Up-To-Date Theatricals Agent, Casting Director books, Backstage, Variety, The Hollywood Reporter, etc.
Union Dues, Initiation Fees & Organization Memberships
List here all union dues, initiation fees and professional memberships you have paid during the tax year. Remember to record here any union dues deducted automatically from your pay checks.
List all other business or personal expenses that you think may be deductible. Consult your professional tax advisor on these deductions.