Posted March 25, 2011
Let's Not and Say We Did
By Sandra Karas
VITA Volunteer Income Tax Assistance - read more articles and get tax help click here... (Members Only)
It can't be repeated too often that certain expenses most of us incur are simply NOT deductible on our income tax returns, regardless of what your roommate or uncle or the swing on your tour had to say! We hear them every day and we must respond with the same disappointing answers. So, on to what your acting coach (or your dad's golf buddy or your former professor) insists are tax deductions, that AREN'T:
1. Gym Memberships - This is a popular expense and an equally non-deductible one for many of our members. Staying in shape and transforming yourself in those very important and highly employable ways may be the tickets to more work, but are considered personal expenses by the IRS. So, enjoy your Pilates, yoga, spin classes and general exercise regimens, but don't include the gym membership as a business expense. The few exceptions to this rule are the specialty classes your gym offers that can be considered performance related (dance classes, martial arts, fencing and the like). Keep track of those individual receipts as they are considered performance training. General toning and fitness workouts, unfortunately, do not qualify. And, in spite of the name, health clubs do not qualify as medical expenses either, unless specifically prescribed by a medical practitioner to cure a medical problem or disease. (If it makes you feel any better, firefighters and police officers aren't allowed this deduction either.)
2. Hair Cuts - Your hair may be one of the most important aspects of how you present yourself, especially if you pass yourself off as St. Jimmy at all of your auditions (androgyny is totally in these days), but maintaining that look for your agent or while you're auditioning and interviewing for work is simply not a business deduction. But your agent made you do it!!! We know and we sympathize, but you can't take it off your taxes. There's an exception to this (as there always seems to be) for the cost of your hair care only when you are working and that's assuming the producer or employer does not provide you with a wig or a hair stylist (which they usually do). And we would argue that make-up and hair care for your head shots would also be deductible, but that's a one- time expense as well. Maintain your hair style, but don't tell your accountant about it unless you needed to keep it up while you were on a gig.
3. Hair Coloring - Same rule holds for color maintenance as for the cuts and styles. Unless you have to pay for it while you're employed as an actor, it's considered a personal expense and not deductible. Theatres, studios and other venues generally provide for hair care, wigs, cuts, coloring, etc., so let them do the heavy lifting when you're working.
4. Make-Up - Who still buys "theatrical make-up" these days? Greasepaint and nose putty have given way to more natural and non-specialty products in the theatre, but actors are still required to provide their own kits for theatrical jobs. Generally, grooming is considered a personal expense and men and women in every walk of life engage in some kind of applications of grooming products in their everyday lives. Congress thinks this is just another personal choice and makes no provision for it on the tax return, unless your make-up is clearly associated with a current job and is for use on the stage. Again, we find the maintenance of an actor's look, the requirements to successfully audition for on-camera work and stylized performances that require more than average street make-up to be necessary, but caution the deduction of those expenses. What we recommend is that you purchase or stock your "kit" every time you get a gig. This will allow you to associate the make-up, false eyelashes, and other applications with a specific job, one that requires you to wear make-up under bright, artificial stage lighting. (Note: most television and film gigs will provide make-up and a stylist, so there's usually no requirement to buy make-up for those jobs.)
5. Cosmetic Surgery and Dentistry - No tax savings here, my friends, just the sheer pleasure of showing your parents the new veneers, or your agent the rejuvenating blepharoplasty (eye lift). In fact, cosmetic procedures are not even deductible as medical expenses, unless they are prescribed by a physician to correct an accidental, traumatic or congenital defect or disease. If you feel that surgical or other cosmetic enhancements or procedures will help you earn extra money in the biz, understand that you'll be doing it your own nickel with no deduction to help you heal.
6. Audition Clothing - This is a favorite among our members who insist they wouldn't be caught dead in anything they have in their closets and insist on deducting clothing they are forced to wear just to get work. We feel your pain, but cannot provide any relief on your 1040 - sorry! The government approach to this is that every working American conforms to a dress code of one kind or another and is not allowed to deduct the cost of business or work attire - so why should you be any different? The rule is that if it can be considered "street wear," it's not a business expense. The exception to this rule is for specialty costumes or uniforms (dance clothes and shoes, clown wear, doctor or nurse uniforms, police or fire uniforms, etc.). If you provide these specialized kinds of clothing on your gig, you may deduct them. You may also deduct the cost of dance wear generally, provided it is specialty dance clothing and not just the tights you bought at Macy's. You may also deduct the cost of cleaning and laundering your own clothing if you have to wear it on a job and the employer does not provide a laundry allowance.
7. 100% of Telephone Charges - How to apportion? Therein lies the rub! With a few Paleolithic exceptions, most of us no longer have land lines and use only one telephone for personal and business purposes. The rule states that the second line may be deducted as a business expense on tax returns - period. But if you don't have that second phone account, you can argue that your one phone account is used for business and hope for the best. You would then apportion your charges according to your business use of the single phone. There's no easy way to do this except to keep a representative log of your own as to how many calls you make or receive in a week that are business-related versus those that are personal. Do this a few times a year and you'll have some method whereby you can justify the portion you deducted for business. Your invoice will probably have a breakdown of the calls and you can do the math from there. Any specialty features, such as a data package are deductible if you purchased them for staying in touch with your agent, web site, on line services, etc., so don't overlook those additional charges.
8. 100% of Business Equipment - The same rule for apportioning your phone charges applies to equipment that you use both personally and professionally and this one's even tougher to calculate because there's no handy invoice to reference your business use. Again, keep a representative log of your use ( a week's worth of "log" kept a few times during the year); you can do it by observing the hours you spend using the equipment for business purposes versus the personal stuff you do with family and friends. Computers, iPads, printers, monitors, Droids, iPhones, etc. are in this category. Observe your use habits and note them, then compare the business time to the personal use and you have some method for explaining your deduction. Remember, the onus is on you to support the business expense and every actor is different, so don't rely on what your friends are claiming - rely on your own experience. The exception (isn't there always one?) to this rule is those items that are second or duplicate purchases (eg: you buy a new laptop for travel or simply to upgrade your capabilities, but you keep your current one for personal use - the second computer may be 100% business, if you indeed use it that way). Our Stage Managers often have duplicate equipment and can deduct the "second" purchases as business expenses. Keep those current items and it may make life easier when it comes to tax time.
We'll continue to monitor the trends and education in our audits and keep you posted. We hope to convince the IRS that more of these non-deductible expenses can be loosened for members of the entertainment industry.
Filling out your W-4 form
If you've ever been caught short and owe tax when filing your returns, you know how you wish you had more withholding last year. While you can't do anything about last year's withholding taxes, you can change things this year. When you get a gig, you fill out a W-4 form to tell your employer whether or not you're married and how many dependents you support. Our advice is to complete the form with your actual information. This means that if you are not married, check single. If you do not support any dependents, write zero or one at the most. Again, you should not rely on your roommate or your pals in line at the last EPA for advice in this area, unless of course, they want to pay your tax next year. When in doubt, check with a tax expert before you submit your withholding forms.
The VITA office is open Mondays, Wednesdays, Thursdays and Fridays (no Tuesdays) from 10:30 to 4 on the 14th floor of the New York Equity building. Telephone 212-921-2548. Sandra Karas is Site Coordinator/Director of VITA, Secretary-Treasurer of Equity, a member of SAG and AFTRA and the embarrassed customer of not one, but two, land line telephone accounts.