Q: What can actors take as tax deductions?
In the USA, dealing with the IRS and their rules when it comes to deducting expenses to reduce the taxes you owe can be a harrowing experience. Generally, being able to prove the business reason for taking a deduction is almost as important knowing what you can and cannot deduct. Here’s a list of items in both categories.
It seems that every March or so, at least here in the US, actors find themselves asking the same question aout their tax return: “Can I deduct this expense?” If it’s related to your acting career in a tangible, reasonable way, then usually the answer is yes, but in some cases, it’s a resounding “maybe” or an emphatic “no.” With everything I list here be sure to consult with your own accountant or tax preparer for your exact limits, eligibility and requirements.
Here’s what you can deduct, as long as you have a receipt and make notes about the deduction – and they all revolve around the process of getting and doing our work. I put the term “for paid acting work” at the end of every category here because unless you’re active and engaged in getting paid work, your accountant will tell you that there’s a chance that if you don’t ever get work, the IRS may deem your “career” as a hobby, not a profession. Also – if you purchase an item, like clothing, that you use for wardrobe in a production, but can also easily be worn in everyday life, that isn’t eligible for deduction as relevant to “paid acting work.” And because it’s sometimes the biggest expense that we have when making the transition from “aspirational” to “working” actor, let’s be clear: your initiation fees and dues for any acting union, SAG, AFTRA, ACTRA, AEA and others, are all tax deductible.
Aren’t you glad no one at the IRS is casting a feature or episodic?
Costs related to training yourself for for paid acting work. Every class you take that’s related to your career, whether in acting skills, how to run your business, what the business is like, etc are deductible. When you take workshops or seminars, including casting, on-camera, improv, stand-up, cold reading etc workshops, the cost to members of the organization and the costs for individual classes and materials you may have to purchase to engage in those classes are all deductible. And keeping up with the news of your industry through trade publications, online subscriptions, professional workgroups and organizations, even magazines and newsletter subscriptions are all deductible.
Auditions may not appear to have costs associated with them, but they do, and they are deductible. Submitting yourself online is sometimes charged for by the year or by the submission. If you get a really important audition, and you decide that audition coaching is appropriate, the cost of your coach, privates and renting space or hiring musicians or a videographer for a remote audition are all deductible. If you put yourself on tape for an out of town audition, make sure you keep track of all costs you incur there – they are deductible.
Costs related to marketing yourself for paid acting work. Getting your headshots taken, reproduced and touched up, along with shooting, editing, uploading and fees for presenting your on-camera demo reels, similar costs in creating your voiceover audio demos and any help you have to pay for to get your resume in shape are all allowable deductions. Any gifts you give to people who might be influential in the hiring process (up to $25 per year per person), any agent’s and manager’s commissions you pay, the costs of online casting site memberships and submission fees, style and image consulting costs, the percentage of cell and internet use that’s truly dedicated to your business efforts, office supplies and postage, and even the purchase of office equipment, replacement or repair of your gear, cameras, and recording equipment are all deductible.
Be careful to check for the upper limit of what you can call office equipment and what you acquire that the IRS wants to call an asset, usually $600. If it’s less than that, you can deduct the full cost. If it’s more than that, you have to depreciate it over a number of years of useful life.
Costs related to getting to paid acting work. Traveling to auditions, traveling to acting class and workshops, traveling to the actual set for work, traveling outside your work zones are all eligible for deduction or mileage, but note that I didn’t mention traveling home, as the customary mileage is to get to someplace, not from that place back to your house. And don’t forget to offset your expenses with any reimbursement you get from the production company. You don’t want the IRS to bring that up for you. And, if you want to get sticky about it – if you’re a series regular, the IRS can deem your job an ongoing job and not allow you the deduction for mileage, just as they don’t allow a teacher to deduct mileage for driving to school or an auto mechanic mileage for driving to the shop.
Costs related to actually performing paid acting work. Check both on and off your pay stub for items that you can deduct: union dues, which vary based on the amount of work you get, your agent and manager commissions, makeup you may apply yourself, the use of your own wardrobe, your own vehicle and/or your own props, again, remembering to declare any wardrobe or prop bumps you get as income from the production company.
There are consequences if you simply talk to other actors and then rely on their “experience” for the basis of your decision to take a deduction or not. I’ve heard time and again that deducting the cost of movie and theater tickets is perfectly permissible. One particular expert would like to disabuse you of that notion, or at least prepare you to be properly armed with backup should you be audited. Chuck Sloan, writing in Backstage, says:
The IRS will normally disallow anything you spend to watch movies, plays, and cable TV, as it considers these expenses entertainment. It is up to you to prove their educational value. Don’t argue with me; that’s the rule. So create a viewing log and write down what you learned when watching the show—such as who cast it and the style of the production—or plan to lose this deduction. If you don’t take these steps, I would urge you to simply forget about writing off this expense.
Finally, keep records – meticulous records. Take the kind of records that make people chuckle at how fastidious you are – it’s happened to me before that a loved one will comment on my mileage log or my meeting log. I’m more than happy to suffer the slings and arrows of outrageous sarcasm, and by opposing them, be safe with the IRS. Who you met, why you met them, where, what time, what you talked about – the more complete you are about the meeting, the less likely you’ll be treated like an amateur.
What’s your answer to this acting question? Let me know in the comments below.