Tax Records & Receipts for Actors
And I can identify with the motivation behind such a statement-but I have to point out that actors don't live in a world of non-commercial artistry. Actors live in the real live world, and in that real world, taxpayers without records and receipts are wee little lambs, crying for the big bad wolf of the IRS to come gobble them up.
So one of the most important "tax truths" I can possibly impart to you is how to keep good records, and why it is so vitally important.
Of course, one reason is that if you are ever audited (and because of the nature of actors' tax returns, that is a very real possibility-even for lower-income actors), the absence of records and receipts will cost you thousands of dollars.
But an even more compelling reason is, that if you are not keeping good records, you are very likely cheating yourself out of huge chunks of change from deductions you could rightfully claim.
SOME GENERAL RULES
One general rule to remember is that there are few general rules-there are exceptions to most IRS requirements. That being said, in general the IRS requires written receipts for any individual expense, which is $75.00 or more.
But while you are exempted from written receipts for smaller expenditures, they do require record-keeping. To qualify, smaller expenditures must be listed in your "business log", and they must show the date of the purchase, the purchase amount, and the business purpose. A business log can be a record of your choosing. For example, there are record-keeping systems such as those produced by Holdon Log, which are designed just for actors. Or, you can make notes in your daybook or calendar-or something as informal as a steno notebook.
The important thing is that you keep the records, and that you do so on a regular basis. Far and away the best method is to list them at the time of purchase, but life gets in the way of that sometimes. When it does, I suggest you set aside 10 or 15 minutes once a week to make these notes.
If you wait much longer than that, your memory will fade, and the receipts will get lost-and you'll lose a perfectly legitimate deduction.
One record-keeping device, which is dirt cheap and easily accessible, is a thirteen-column ledger, available at any office supply store. You simply list the place of purchase and the date on the left of the page, and the amount in any of the columns, with each column being reserved for a category of purchase, such as office supplies, travel, etc.
CARS AND DOLLARS
For most actors, especially those based in LA, your car is a major source of expense and at the same time, a major source of tax deductions.
To qualify your mileage as a deduction, you MUST have good records. We have found, in almost every case, that the Mileage Method of determining your deduction works best.
You don't have to have receipts for automotive expenditures, but you do have to have-you guessed it-good records.
This means keeping a mileage log-and although it's a pain, it will dramatically increase your possible deduction, because you won't overlook miles driven for business-and you will have all necessary records if required to produce them.
Let's start with what is not deductible-commuting miles and personal miles. So driving back and forth to your day job is not deductible-but going from you day job to an audition is. So is almost any trip you take to get work. That includes auditions, call-backs, casting visits, trips to acting classes, to agents and managers, to the post office to mail submissions, etc., etc.
At this year's rate of $0.485 a mile, that adds up quickly.
You will also need to know total mileage for the year. Make an odometer note in early January, and another in late December, or find a mechanic's receipt that lists mileage from those two times.
Mileage is an important component of any actors deductions, and especially so in an area of such wide geography as LA.
There a number of good ways to do this. Here's one which many actors have adapted, and that serves them well.
Go to an office supply store and buy a large accordion-style file box, with thirty-one slots. Then label as many of those slots as is practical for you, by category: Office Supplies, Research, Acting Classes/Workshops etc.
Once a week, when you list your expenditures in your log, simply drop the written receipts into the appropriate slots. If you are using credit cards, two points: keep one credit card just for business expenditures, so you know everything charged to it is business-related. Secondly, write purchase details on the back of the credit card slips. Remember, for a business meal, you need to show who your guest was, and the business purpose of the meal. Business must be discussed at the meal, not before or after.
You are the CEO of your own corporation-and every corporation needs a good Finance and Tax Department, or it will flounder and fail. So stay on top of your tax records and receipts, and remember, if you build your success now-when you get your series you can turn all this over to your Business Manager, and concentrate on being an artist.
By David Rogers
Article printed with permission from iActingStudios.com and Rick La Fond. Copyright 2013. All rights reserved. - iActing Studios is a premiere provider of Online Acting Classes. They feature hundreds of hours of in-depth classes; hosted by professional instructors and coaches who've taugh some of Hollywood's most famous A-listers.