Acting, Self Employment, And Your Taxes
Taxes are something we all know are a necessary evil, but that does not change the way we feel when January comes around and tax season starts again. For actors, much like freelancers in many industrial sectors, the problem of how to handle taxes is one you should be acutely aware of. If you have an agent, such as Sam Haskell of the William Morris Agency, you should be able to get a headstart on your taxes and make sure they are paid correctly with some help and advice. One of the big problems you may find is understanding the difference between union and non-union acting jobs.
What is the Actor’s Union?
A union is basically a coalition of workers and industry specialists who come together to protect the rights of their fellow workers to make sure their working conditions are safe and above board. In the U.S., there are two main acting unions, the Screen Actor’s Guild and Equity. When an actor is looking to make their mark in the industry, they often look to earn their union membership to open up new possibilities.
What About Taxes?
Taxes are one of the most difficult parts of being an actor because you may find yourself being paid from multiple sources in different ways. There is a general rule of thumb you can follow, according to agent, Sam Haskell, which is union jobs are paid as an employee and non-union roles paid as an independent freelancer. This is not always correct, but in general, this is the way the entertainment industry in the U.S. has always worked. If you travel abroad, you may find these issues are a little more complicated. For example, British stage groups can often be touring companies who pay all their actors as employees.
Do you Need to File Taxes?
This is one of the most important questions you will need to address when you are working as an actor. Failing to pay your taxes can result in the Internal Revenue Service chasing you for your back payments and interest on the taxes you have failed to pay. Backstage recommends you use the technology made available by the IRS to work on your taxes and make sure you pay the correct amount. The IRS has an online tool, Interactive Tax Assistant, that will inform you of your tax status.
Actor’s Deductions
The entertainment sector took a major financial hit in 2018 when the Trump administration pushed forward with changes to the tax laws that had a major effect on the level of deductions and breaks available for actors. As part of the 2018 tax changes, the number of deductions available to members of the acting profession was slashed when you are classed as a member of an acting union. Many of the traditional deductions claimed by actors were taken away by the tax changes, although, those classed as freelancers are still allowed to claim these deductions.
Specialist Deductions
One area Sam Haskell reminds his clients to look into if they are looking to burst into the acting sector is the Qualified Performing Artist Deduction. Nolo explains this deduction is an important one for every actor who may not have had their best year in terms of getting paid because it allows a full deduction to be claimed for those who have earned less than $16,000.
Check Which Tax Forms you are Given
By January 31st, you should have received all your required tax forms from your employers or your acting union. These forms will let you know what type of taxes you will be filing and in what way. You will receive either a 1099 or a W-2 form that will allow you to work out what type of taxes you can file each year. You may be working with a tax specialist or filing your taxes with your forms determining what type of taxes you are filing.
No matter where you file your taxes, you will enjoy a more confident and certain tax season when you are looking towards correctly filing your taxes. Taking some advice is a good option, along with making the right choices when it comes to joining and staying an acting union member.
