What % of my cellphone bill can I deduct?
This might be the most common question I get, and the answer depends on how you use your phone in your career. For example, very busy commercial actors or print models who run around the city most days attending go-sees, all the while in frequent contact with their agent, would claim a higher % than a performer who only checks their voicemail a couple of times a day during their restaurant shift. In any case, in an audit the IRS would frown on a 100% deduction, so be realistic and reasonable, keep the deduction between 20-80%, and you should be fine.
What % of my internet bill can I deduct?
Like the first answer, be realistic, and again think about the necessity of the service in terms of your career. If you actually use the internet in the course of earning your income, then a higher % is fine. Otherwise, think in terms of 30-70% for this expense. (FYI: The cost of maintaining a website should be deducted as publicity.)
I bought a business suit that I only wear for auditions… can I deduct it?
No, never. The only deductible clothing for tax purposes are legitimate costumes, uniforms, and dancewear. That’s the IRS rule, not mine. The same goes for women and role-specific audition garments.
Can I deduct the cost of all the monthly Metrocards I bought last year?
Only if every single transit trip you took was to look for work, and you can prove it. Here’s a better method: From your audition calendar, add up the total number of auditions and unpaid rehearsals you attended, and multiply that by the cost of a round-trip on the subway. Add in 3 or 4 cab rides for when you were running late, and there’s your deduction. (This applies to regional transit use as well.) But remember… commuting on a regular basis to & from a paid job as an employee is not deductible. On the other hand, if you’re a freelance (i.e. 1099) worker, then getting to/from your paid gig is probably a deductible expense.
What’s “entertainment for business”, and how much can I deduct?
Be careful with this one, as the IRS tends to focus on it at audits. Their definition is that it’s the cost of “entertaining” someone, (via meals or tickets, etc.), who can assist or advance your career. In our case the examples would be a casting director, musical director, playwright, agent, director, or the like. (Not your castmates whom you treated to a round of beers after rehearsal.) Keep the receipt, and make a note of the person’s name and the business relationship.
Can I deduct the cost of dance or Pilates classes I attended at my gym?
As a performer, generally not. But if you can get an itemized receipt from the gym detailing the type of class and its separate cost, that would be OK. Gym memberships are considered by the IRS to be a personal expense, so unless you earn your living as a competitive weightlifter, pilates teacher, or personal trainer, they are NOT deductible as a business expense.
Can I deduct the cost of every show and movie I saw last year?
Maybe. This is an area the IRS is looking more closely at in audits, so use caution. If you’re a film actor, then film tickets are probably fine… same with theater performers and theater tickets, but in both cases be prepared to defend the expense, (i.e. researching a role or a director’s work), should an audit occur. If you decide to cross over and deduct tickets for a part of the profession in which you don’t actively participate, be aware that it could get thrown out in an audit, (though it’s not an expense that’s likely to trigger an audit in and of itself).
What about haircare and makeup?
Another area in which to be judicious, especially for women. The IRS assumes that you have regular personal expenses for this, so it’s inadvisable to try and deduct the cost of all the makeup and hair products purchased at Walgreen’s or CVS during the year. Better to have receipts from a dedicated theatrical makeup retailer. Even better, get a clause in all your contracts stating you are responsible for the cost of your hair maintenance and makeup, unless you’re not, in which case you won’t have the expense. For men, neither of these deductions is a huge issue, especially since few of us wear much makeup these days, but no deductions for haircuts unless it’s contractual. The upshot is, if it’s for a show and your contract says you have to pay for it, it’s OK… everything else is considered personal grooming. And the closer the expense is to the start of a job, the better.
I worked on tour and received a per diem… how does that affect my taxes?
For most actors, the amount you might have received in per diem to cover housing and/or meals is almost always less than the IRS says it should cost you to live in hotels and eat on the road. Because of that, your per diem amounts are never taxable, nor are your expenses deductible, since the IRS assumes that you’ve spent the entire amount. So you really don’t need to save any receipts for either housing or food, with this one caveat… if you’re a luxury-craving, steak-eating spendthrift, then it’s conceivable that you might have spent more than you received, which means you can deduct the excess expenses on your tax return, providing you kept all your receipts. If you spent less, then congratulations… you get to keep the excess tax-free. (And remember: per diems are only meant to cover housing and/or food. Any other expenses you had while away from home overnight are generally fully deductible… see the Out of Town worksheet for details.)
I’m working out of town… do I really need to be grabbing for those restaurant receipts after each meal?
No, you don’t… this is a common fallacy left over from the old days of touring. The IRS publishes meal allowance rates for each US location, which we use to calculate what you should have spent on food while on tour or at a regional theater during your time in each locale. In my experience, these allowances almost always end up being more than actual expenses, particularly if you have access to a kitchen. The upshot is that as your preparer, all I need are the locations and dates for each out of town job or audition trip, and I’ll do the rest… it’s just easier.