Tax Deadline #TimeIsUp
April 17th is the tax deadline. In honor of National Tax Day, we're offering 5 tips to keep in mind. Even if you've filed already, tax season will come around next year and it's good to keep these tips in mind.
1. Work with a pro. First things first: seriously consider working with a professional tax preparer instead of trying to do your own. Though there will be some upfront costs, the modest amount will be offset by potential tax savings this professional will find, and the preparer’s fee will be deductible in the next tax year.
2. Be selective. Seek out a tax professional who specializes or has expertise in the entertainment industry. Large, multi-office tax companies may do good work for people with office jobs, but they simply aren’t aware of the unique aspects of taxation that a working actor’s return represents. For example, did you know that an actor can often deduct tickets to certain movies? The thought of doing this can make a mainstream CPA’s hair stand on end, but the right preparer will have no problem here.
3. Are you a professional actor? If you worked as an actor and have been monetarily compensated (or are awaiting receipt of compensation), you are a professional actor. There is no minimum payment required to be considered a professional actor, and yes, a residual can count.
Unfortunately, this means that if your work as an actor in 2016 did not result in payment in the form of money (ie you took a job for exposure, contacts, or experience), you don’t qualify as a professional actor and can’t deduct your acting business expenses.
4. Stay on top of your records and receipts. Make yourself a promise to keep excellent records and receipts in 2018. Make copies of every single receipt you think can be counted toward a deduction. If the IRS or state tax authority asks for proof of your deductions, you’ll need a copy to send their way.
Make sure you’re keeping track of income such as an income ledger, which is a simple list of anyone who paid you money throughout the year, particularly as an employee or independent contractor.
Keep an eye out for your income documentation like W-2 and 1099 forms in January. Federal law says employers must send W-2s by January 31, so use that income ledger to make sure you’ve received every one you’re supposed to receive. The same applies to work as an independent contractor, except you’ll receive a 1099 Misc. One thing to note: Employers are only required to send you these forms if they paid you more than $600 in the calendar year, but you still have to report that income.
Something you may not have thought to pay attention to is car mileage. That’s right, there are instances where you can deduct the total miles you drove and the cost of gas. Just make sure you know how many miles you drove in 2017, and the number on your odometer come January 1, 2018.
5. Look back to last year’s taxes. Did you make any estimated tax payments on your own in 2017? Did you make any additional payments when you filed your 2017 return?
If the answer to either question is yes, make a list of the dates paid, the amounts, and the method of payment as the amount could be deductible.
If you think you’ll owe taxes, you may want to consider making any large planned purchases in December. For example, if you plan to buy a new computer in the near future, doing so in December will help reduce the taxes owed for 2017, and you’ll have the usage of the new gear throughout all of 2018.
Of course, doing your taxes as an actor is more complicated than just what we’ve talked about here, but this information should be a great start on the path of a successful tax year.