Like most specific expenses, the items listed below are unlikely to trigger an audit in and of themselves, but could be an issue if you happen to be the subject of a random audit. That said, audits are relatively rare these days, so don’t be too concerned… but please do be as honest and accurate as possible. I’ll certainly let you know if an expense seems to be out of line relative to your income.
As most of you know by now, professional job-related expense deductions are no longer allowed on the Federal tax return for those with only W-2 employment income. You can likely still deduct expenses if you have any type of freelance or sole-proprietor (i.e. 1099) earnings. Some states, notably NY and CA, also still allow job expenses for employees, but only if those expenses, (when combined with other non-job itemized expenses), exceed the state standard deduction.
What % of my cellphone bill can I deduct?
The answer depends on how you use your phone in your career. Obviously, remote auditions have certainly affected this calculation in recent years, since most of us record and upload using our phones these days, as opposed to occasionally checking for messages from your agent, as in years past. In any case, in an audit the IRS would frown on a 100% deduction, so be realistic and reasonable, and keep the deduction below 90%.
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. Of course, with most auditions conducted remotely these days, a higher career percentage than in past years for most of us can probably be justified. Also, if you actually use the internet primarily as a way of earning your income, then a higher % is fine. Otherwise, think in terms of a maximum of 80-90% for this expense. (FYI: The cost of maintaining a website should be deducted as “publicity” on the worksheet.)
I bought “street clothing” that I only wear for auditions… can I deduct it?
In most cases, no. The only deductible clothing for tax purposes are legitimate show-worn costumes, work uniforms, and dancewear. That’s the IRS rule, not mine. The same goes for any role or period-specific audition garments or accessories.
Can I deduct the cost of all the monthly transit cards I bought last year?
This is much less of an issue since the rise of remote auditions, though there might still be a few in-person callbacks and such to account for. From your audition calendar, add up the total number of auditions and unpaid rehearsals or performances you physically 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.) 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 are “business meals”, 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 treating someone to a meal 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 cast-mates 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. Please note that as of 2018, the cost of business entertainment, as opposed to meals, is no longer deductible.
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?
This is an area the IRS is looking more closely at in audits, so use caution. If you’re a film actor, then some film tickets are probably fine… same with theater performers and theater tickets, but in both cases be prepared to defend the expense, (i.e. it should be research for a specific role, show, or the director), 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 disallowed in an audit.
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/online seller. 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 standard 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 overnight out of town job or audition trip, and I’ll do the rest… it’s just easier.
