Today Mary tells us that she just moved to New York to pursue an acting career. Mary says, “I currently work as a secretary, but I plan to take auditions and classes in my days off and evenings. I would like to deduct my classes and other such expenses as business expenses related to my acting career. However, most of my income currently comes from my secretary job. Is it OK to deduct expenses for a second job, even if it doesn’t produce much income?”
Good for you! Follow that dream!
You bet that you can deduct the expenses from your acting career, if you’re seriously pursuing it. There are two different forms you may use, depending on how you’re getting paid.
If you’re getting paid as an employee (where they give you a W-2) you’ll put all your expenses on Form 2106.
If you’re getting paid as a freelancer – without any withholding, you’ll report all your expenses on a Schedule C.
There’s an interesting special twist in the law just for actors who get paid wages – if your total income, including your secretarial income, is $16,000 or less for the year. When your income is that low, you’ll be able to take all the expenses from that Form 2106 and deduct them right off the top of your income. You’ll put all those expenses on line 24 of the Form 1040, on page 1. You won’t even have to itemize.
If your income is more than $16,000 – which it probably is if you’re living in NY, then, you’ll just have to put the total Form 2106 expenses onto the itemized deduction form. That means, you’ll get little or no benefit from them in the first couple of years. You’ll have to do the computation to see what I mean.
In the meantime read the instructions in IRS Publication 463 for the details on Performing Artists. http://www.irs.gov/publications/p529/ar02.html#d0e344
And get help from a good local tax professional who knows the rules for actors. Not only will you get tax help, but who knows what kinds of connections that person has?
And remember, you’ll find answers to lots of answers to questions related to starving actors and successful actors and other tax information, free. Where? Where else – At TaxMama.com![Note: If you were subscribed to the e-mailed TaxQuips, you’d be getting other exciting news and tips, too. Please click on the subscribe link and join us.]
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- IRS Publication 463 :: Special IRS rules for Performing Artists
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