Many times during the tax season we get frantic calls from actors wanting to know how to find the proper consultant to do their taxes. These calls usually come from people who have had bad experiences with so-called experts in the previous year. Let us tell you how to find the "right" theatrical tax consultant, so you can have your return prepared properly and intelligently, and then live with yourself peacefully after it is sent in.
You are an actor or actress. You go to classes. You're in a show with other people like yourself. You work Off-Broadway. You certainly are going to meet actors who have been in the business longer than you have. For goodness sake, ask them where they have been going for years. If a TC is recommended, ask around about him or her. What are the TC's credentials? Will he or she sit and talk with you while your taxes are being prepared and explain everything as you work along? If you get notices from "downtown," will the TC be there for you?
Find out about the TC's reputation before you go. An actor opens so many wrong doors during the year, doesn't he? So you make sure the door you open to your tax consultant is the right door. As we said in our very first column many years ago, "When you go to a tax consultant to have your taxes prepared, he must make money for you. If he can't, lose him."
If the TC is going to make money for you with his or her knowledge and expertise, it won't cost you anything. To sum it up: Go where the winners go!
Last week we discussed the value of important tax credits like the Earned Income Credit and the Hope and Lifetime Learning Credits. We must also mention the Child Tax Credit. This credit was initiated four years ago and is available again to those of you with dependent children. You may be able to claim a credit worth $600 for each child under age 17 at the end of 2002 whom you claimed as a dependent. The child may be your child, stepchild, grandchild, or great-grandchild. The credit is $600 times the number of children you claim. The credit will be raised every few years until it reaches $1,000 by 2010. This credit will reduce your tax liability dollar for dollar. If, however, you are liable for Alternative Minimum Tax (AMT), your credit could be limited. To determine if this is the case, you should prepare a special IRS worksheet that will help you calculate the reduced credit. Also, be aware that if your modified adjusted gross income rises above certain threshold amounts, then the Child Tax Credit will be phased out or even eliminated.
Many people are confused about the Presidential Campaign Fund check-off on the tax form. This fund was set up to help pay for presidential election campaigns. It does not go to any particular party or candidate. Checking "yes" will not change your tax or reduce your refund. If you are married, your spouse may also elect that $3 go to this fund.
If you changed your name because of marriage, divorce, or professional reasons, you should make sure that you immediately notify the Social Security Administration so that the name on your tax return is the same as the one the SSA has on its records. This may prevent delays in issuing your refund and help safeguard future Social Security benefits. The name change is made by simply filing Form SS-5, which can be obtained at any SSA office.