Tax deductions are crucial for professionals in the entertainment industry, particularly actors, to minimize their tax liabilities and maximize financial returns.
Tax deductions are an amount, often a personal or business expense, that reduces income subject to tax (see IRS definition). This may include expenses incurred while conducting business that can be subtracted from your total income, thus reducing taxable income. As a professional in the entertainment industry, there are specific deductions tailored to your profession that will ultimately save you money on future taxes owed.
These specific deductions will lower your taxable income, which reduces the amount you owe the government in taxes, known as your tax liability.
Tax liability is the amount of taxes that must be paid. You may meet your federal income tax liability through withholding, estimated tax payments, and payments made with the tax forms filed with the government (see IRS definition).
By leveraging these deductions, professionals in the entertainment industry can minimize their tax liabilities and potentially significantly reduce their taxable income.
Common tax deductions you can use as a professional in the entertainment industry may include:
- Business Travel: All business-related expenses, such as airfare or other transportation costs, lodging, and meals accrued whilst traveling between auditions, shows, and performances. Deductible local travel may include trips to performances (both as a participant and observer), rehearsals, acting classes, auditions, and travel to pick up supplies.
- Agent Fees: All fees an actor pays to an agent.
- Management Fees: Talent management fees directly related to securing and maintaining employment in the entertainment industry.
- Acting Property and Supplies: The cost of video and digital cameras, sound equipment, theater and film books, musical scores, computers, and cell phones used to shoot promotional tapes and portraits.
- Union Dues: Fees associated with entertainment unions or organizations such as the Actors Equity Association and the Screen Actors Guild.
- Education and Professional Development: The cost of any professional education that enhances or improves entertainment related skills, such as acting classes or coaching lessons.
- Promotional Expenses: Photos, videos, websites (including internet connection costs), listings in professional registries, advertisements in trade publications, business cards, and other promotional expenses.
- Beauty Services: Makeup, nail, and hair care when incurred directly in connection with a specific job.
- Costumes and Wardrobe: The cost of clothes worn exclusively for performances, auditions, photoshoots, dance performances, or gigs is deductible
- Legal and Professional Services: Fees paid to attorneys, accountants, consultants, and other professionals related to work in the entertainment industry.
This blog is intended for informational purposes only, and should not be construed as tax, legal, or accounting advice. Please consult with your tax, legal, or accounting professionals for any advice and guidance.