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Financial Advice

Valid Deductions

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Valid Deductions
This week let's look at the specific acting-related expenses you are allowed to write off on your tax return. Remember, though, you can't take any of these deductions unless you have receipts and expense records to back them up.

Obviously, you can write off the costs of your headshots, duplications, classes, coaches, and résumés, as well as the editing of your reel and voiceover tape and other promotional efforts. We generally include gifts for business in this area, but remember, each gift is limited to just $25 per person per year.

What you paid for classes and your agent and/or manager fees will be significant deductions for actors who are aggressively pursuing their careers. Make sure you can validate these payments: Keep your check stubs.

Union dues and initiation fees are always deductible. So too are costume expenses, but not the cost of any clothing that can be considered general street wear, even if you personally wouldn't wear it on the street. If you buy props for your classes or auditions, keep those receipts. Be sure to document how and when you used the items, as sometimes props can seem a lot like normal household objects to an auditor.

If you're holding Back Stage in your hands, don't forget the $2.95 per issue you pay for the privilege (or the cost of your yearly subscription). Other trade publications count too. Then there are the amounts paid to casting websites and submission services, including BackStage.com. Keep your records not only for the initial sign-up fees but also for less-significant costs, such as the charge to change your headshots.

Did you rent studio space to rehearse a scene for class or an audition? Write it off. Did you have other audition expenses, such as sides or hiring an accompanist? Don't forget them.

There are certain expenses, such as your cell phone or your Internet access, for which you can deduct a percentage for business use. Don't be greedy and try to take the full amount. For most people, personal usage is greater than business usage. Many people are eliminating their home phones completely and using their cell phones exclusively. But think twice before you do so. In an audit, the Internal Revenue Service has the right to dismiss the cost of your primary phone line entirely.

The IRS will normally disallow anything you spend to watch movies, plays, and cable TV, as it considers these expenses entertainment. It is up to you to prove their educational value. Don't argue with me; that's the rule. So create a viewing log and write down what you learned when watching the show—such as who cast it and the style of the production—or plan to lose this deduction. If you don't take these steps, I would urge you to simply forget about writing off this expense.

If you take a lot of meetings for business, you will need to write down when, where, why, with whom, and the amount you spent. Get in the habit of doing this immediately after (or during) the meeting—and don't lose the receipt.

If you travel, you do not have to keep receipts for your meals, as there is a per diem rate established by the U.S. government that the IRS allows. This amount is usually more than sufficient for anyone. But you still need your receipts and records for expenses such as your hotel and travel (airfare, car rental, etc.).

Always keep your original receipts for all business transactions, including office supplies, postage, maintenance and repairs of business items, and the like. Don't assume that a check or debit-card statement listing Office Depot is sufficient proof that the transaction was solely for a business item.

I have written in previous columns about the importance of keeping a record of all your auditions, classes, and meetings—especially dates, times, and locations—to prove your travel costs. But this record does a whole lot more for you in an IRS audit: It validates the time, effort, energy, and money you put into your career. It acts as a secondary authentication to the monetary records you present. It's persuasive and invaluable, so don't get caught without one.

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