Can Drag Queens Write Off Makeup As A Business Expense?

My 15-year-old histrion, musician, and circus performer files a revenue enhancement render every yr. He meets the IRS standards as a "working professional".

Of import NOTE: This blog postal service was written before the Trump Assistants's tax lawmaking changes. Many (if not all) of the rules for individual taxpayers and small business concern owners have changed.  You should not rely on old data when filing taxes for tax years 2017 and beyond. I will update this when the final rules are published, just as of mid-February 2018, it is unclear which (if any) of these deductions for artists will remain. Do Non RELY ON Sometime INFORMATION, PLEASE.

Information technology'southward tax time. This (long) blog post is written for:

• Actors
• Artists
• Sculptors
• Potters
• Photographers
• Writers
• Dancers
• Musicians
• Singers
• Clowns
• Jugglers
• Magicians
• Aerialists and circus performers
• Comedians
• Drag queens and female impersonators

In brusk, it's for almost people who work as performance artists or those who create works of fine art for sale. The same rules may as well apply to other kinds of "performers" such as rodeo contestants, stunt performers, and those who supplement their income working as a film or Television receiver extra.

The purpose backside the mail service is to endeavor to de-mystify some of the nearly common questions well-nigh what you can (and tin't) deduct when it's time to pay taxes, also as who has to file a revenue enhancement return and what has to be reported. Additional data for the parents of minors who work as entertainers or artists tin can exist plant here.

I am neither an auditor nor an artist. I exercise fix taxes for a son, grandson, and cousin who work as performance artists, withal. And I've linked directly to IRS notices and rules wherever possible in this post.

You should definitely check with a qualified taxation professional in your abode state to make sure that the deductions and rules listed here apply to y'all.

Are You a Professional?

My son Geoff McAlister has performed as a stunt rider for over 20 years. He's invested heavily in props, condom gear, and training for his career. Sometimes he performs in live shows, and sometimes he works in film or TV. Some of his expenses are deductible — prop swords and special Medieval costumes, for case — but others (like riding boots) are not.

For a writer, artist, histrion, circus performer, model, vocalist or musician, thousands of dollars in taxes can often ride on a unmarried question: Are you a professional or just a talented hobbyist? At first glance, it might seem similar an piece of cake question to answer ─ merely there are some surprising twists in the rules, especially in state and IRS rules on tax deductions.

Consider the example of the transgender creative person Venus de Mars. Minnesota Public Radio told the story of a tax audit that resulted in a bill for thousands of dollars in back taxes for de Mars.

De Mars doesn't have a mean solar day job, and earns about $20,000 a year entirely from music, painting and other artistic endeavors. Some years, she earns more than than she deducts in expenses ─ and sometimes, she doesn't, resulting in what she idea were tax deductible losses.

De Mars had filed Minnesota state tax returns since the 1990's, each one prepared by an accountant and challenge deductions related to her fine art and music projects. In 2012, after the completion of a state audit for 2009, 2010, and 2011, the state determined that de Mars was not a professional artist, and disallowed all of her deductions for the iii years covered past the audit.

The state'due south main reason was the department's decision that de Mars enjoyed her work too much, and didn't work difficult plenty to make a profit. After being ruled a hobbyist, de Mars was left with a bill for thousands in dorsum taxes. Only de Mars didn't go quietly. She fought – and nearly two years later on, she won. Simply information technology was a plush battle.

If you are a musician, artist, dancer, actor, clown, circus artist, or otherwise earn your living from your talents in the arts, in that location are some ways to avoid finding yourself in the aforementioned state of affairs that de Mars did. The transgender artist even published her own list of five tax tips for other artists, which you can notice hither.

What Makes Someone a Professional Artist?

Demonstrating the intent to earn a profit, past treating your creative endeavors like a business, is the get-go step to saving money on your taxes. Careful records, and keeping personal and professional person expenses carve up, are vital to avoiding revenue enhancement trouble.

The Internal Acquirement Service relies on Section 183 of the Internal Acquirement Code when determining what deductions can be taken past an artist. The key question, co-ordinate to the IRS, is whether or not the activeness is a hobby, or part of a legitimate business action intended to make a turn a profit. The same standards apply whether you are a performer or create tangible works of fine art that can be sold.

The IRS allows artists 4 years to earn a turn a profit. If you do not earn a turn a profit on your creative activities after the offset iv years, the IRS may decide that what you do is simply a hobby. Your deductions may be limited to the amount of your income from those activities. In other words, they cannot create a deductible loss in unprofitable years. As you progress, the IRS looks at a rolling span of the previous five years.

The rule of thumb is whether or not an activity makes a profit in three of the last five years. If it does, and then virtually tax advisors will say that the costs related to the activity are deductible ─ and if information technology doesn't, and so they aren't.

The limit on not-for-turn a profit losses applies to individuals, partnerships, estates, trusts, and Due south corporations. It does not utilise to corporations other than S corporations. So artists, writers, and performers who are facing losses should talk to a qualified business advisor about whether or non forming a legal entity (a corporation or LLC) could assistance them lower their potential tax liability.

If you can't meet the turn a profit test, you go some other chance to convince the IRS that you are running a business organisation past passing what the IRS calls "the factors-and-circumstance examination". Here, the taxation agency takes a subjective, individualized look at your pursuit.

The IRS fact sheet on determining whether the costs incurred by artists, musicians, performers, and writers are deductible or not poses these questions:

• Does the time and try put into the action signal an intention to brand a profit?
• Do you depend on income from the activity?
• If at that place are losses, are they due to circumstances beyond your command or did they occur in the start-up phase of the business?
• Have you changed methods of operation to improve profitability?
• Practise you have the knowledge needed to carry on the activeness as a successful business?
• Have you made a turn a profit in similar activities in the past?
• Does the activeness make a profit in some years?
• Do you wait to make a profit in the future from the appreciation of assets used in the activity?

If yous can reply yes to a majority of these and then called "factors and circumstances questions", then it'southward likely that y'all are conducting a business. If the IRS determines that your creative activities are office of a business, then the "ordinary and usual" business organization expenses incurred in your artistic activities are deductible on your federal income taxes.

What If I Fail The Profit Test?

My stunt-homo son has caused a number of unusual (and tax deductible) costume items and props over the years, including this custom-made jousting helmet. Items like these, which can't be used except as part of an histrion's performances, are most always tax deductible.

Since the IRS does not automatically decide that an artist who fails to plough a turn a profit for three of five years is not running a business, there are 4 options to consider if y'all fail the profit exam for whatever three years in a row.

• Cut your losses, and exercise something else. This option makes sense if yous don't recollect that you are always going to be profitable, or you are tired of the rejection and difficulty of making information technology as an artist.
• Go on doing what you're doing, and go on to file tax returns showing the losses you lot are incurring. Simply make sure that you lot're existence extra conscientious in documenting deductions and the steps you lot are taking to try to make a profit. Why? Because three years of losses is likely to trigger an inspect. If an audit is triggered, information technology is likely to cover at to the lowest degree the three years of losses, non just the electric current tax twelvemonth.
• Start a new company, and file the appropriate paperwork to create a legal entity that is entitled to more than three years of losses. Exist aware that this can besides trigger an audit, since the IRS may be suspicious of someone who suddenly changes their filing status.
• Stop declaring losses, and pay the taxes on your income without the benefit of the deductions. This tin be a costly option, simply information technology may exist the just choice for some artists or performers.

If you lot have confidence in your talent, and have a solid business concern programme that outlines how y'all are going to turn an unprofitable business organization around, so you have nothing to fear from the IRS if you lot keep good records, get advice from a knowledgeable tax advisor, and manage your artistic endeavors in a pragmatic mode.

Who Has to File a Tax Render?

The IRS website has an "online interview" you tin utilise to see if you accept to file a taxation return. It's online at this address. Of course, you  may desire to file a tax return fifty-fifty if you earned less than the minimum amount that would require you to file a taxation return.

For instance, I know a kid actor who didn't hit the $ten,350 minimum requiring him to file this year – but he earned plenty from network television set and major films that deducted taxes and social security from his paychecks that it was worth the time to file for the refund he was due. His parents opted not to take whatever deductions this twelvemonth, and filed a brusk form solely to get the taxes he had paid in returned. Make sure that if your child files a tax return he does not merits himself as a dependent if you lot are as well challenge him on your tax return –  your individual circumstances will determine whether it's better for yous to take the deduction for your child, or apply it on his or her tax render instead.

In general, for taxation year 2016, you (or your minor child) must file a tax render if yous earn more than the corporeality shown on this nautical chart:

IF your filing status is. . .	AND at the finish of 2016 y'all were*. . .	THEN file a return if your gross income** was at to the lowest degree. . .
Single	nether 65	$10,350
	65 or older	$xi,900
Head of household	under 65	$xiii,350
	65 or older	$14,900
Married filing jointly***	under 65 (both spouses)	$20,700
	65 or older (one spouse)	$21,950
	65 or older (both spouses)	$23,200
Married filing separately	whatsoever age (if your spouse itemizes deductions)	$four,050
Qualifying widow(er) with dependent kid	under 65	$sixteen,650
	65 or older	$17,900

There are exceptions to the minimums on this list. For instance, whatsoever income from royalties or residuals reported on a K-1 class must be reported to the IRS. Then don't forget about those tiny rest checks actors, writers, and artists sometimes become. Even if the royalty or residual income is just pennies, information technology has to be reported equally earned income, and failing to do then can land you in fairly serious trouble.

I alive in the Bible Belt, and a lot of churches and evangelical organizations hire musicians, actors, and other performers. A friend of ours learned the hard style that because churches and ministries are exempt from some IRS rules, there are special rules that utilise to reporting payments from religious organizations.

Their child earned less than $600 for his sole acting gig i twelvemonth – but the cheque was from a "ministry building", which sent a 1099 to the child's parents. They ignored it, which triggered a grueling audit. Why? Because any payment over $125 from certain types of religious organizations must be reported as income, even if information technology is the worker's but income for the year. If you were paid for whatever kind of service past a religious organization, refer to this IRS document before ignoring a 1099, or talk to your accountant about the specific rules that apply to income from a not-for-profit religious organization.

Withholding and Self-Employment Taxes

How y'all become paid makes a difference in how much y'all owe on your taxes. If you work equally an independent contractor, work for tips or donations, or book your ain gigs and bill for your services, you'll receive a Form 1099 at the end of the yr. You're responsible for both the employer and employee portion of taxes, social security and other withholding amounts, too as the cocky-employment tax.

If you work as an employee – even if it's simply for one 24-hour interval – y'all'll be asked to make full out a Class Westward-9 that tells your employer what to withhold from your paycheck. If y'all piece of work as an independent contractor, your employer won't withhold taxes, social security, and other deductions, and you will be required to pay those at the finish of the year.

Don't forget to set bated money during the year to pay the employer and employee portion of taxes (including the self-employment tax and social security) if yous are working every bit an independent contractor or a sole proprietor who bills clients for goods or services. This section of the IRS website can tell you if you are considered cocky-employed, and lists the rules (such as paying your estimated taxes every three months instead of waiting until the cease of the yr) that yous must follow if you are considered self-employed.

Managing Your Fine art Similar a Business

Condom gear, training and rehearsal infinite, classes, costumes and the cost of travelling to and from performances are usually deductible for performers. But regular commuting costs to and from a local performance venue are not.

To brand an air-tight case for being a "existent business" instead of a simply pursuing a hobby, it'southward critical to manage your art in a businesslike fashion. Here are the five basic steps to take to show that you are running a concern based on your talent:

1. Carve up Business and Personal Expenses. Proceed your business bank account completely divide from your personal account, and don't pay personal expenses from a business business relationship. Get a separate telephone line and email address for your business organization.
2. Keep Good Records. Runway every expense with as much item as possible. Proceed receipts and document the business purpose for every expenditure. This is especially true of business entertainment costs. If yous run into an agent, prospective client, or customer at a restaurant, write down the business purpose of the coming together, who attended, and the precise date, place, and cost.
3. Document Your Marketing Efforts. E-mail, flyers, profiles on casting websites, headshots, sample prints sent to galleries, demo reels, online videos – those are the forms of advertizement that nigh artists, writers, musicians, and performers rely on. Make certain that you keep copies of all of the advert materials yous use to reach potential clients or employers, then that you can show it to the IRS. Concern cards, flyers, and videos or photos of your work are often the deciding cistron in an IRS conclusion.
4. Keep a Business Calendar. Put important dates and milestones for your business organisation on a calendar or scheduling app. Information technology's another style to show the IRS that your concern is pursuing the concrete goal of profitability.
5. Get State or City Permits & Licenses. Do everything strictly by the book. Register your business entity with the country, get any required permit or licenses, and follow all local ordinances to prove your case for tax deductions to the IRS. This is peculiarly truthful for operation artists who may require a city allow for street performances, or anyone who accepts commissions for art piece of work or photography that require a business license. Check state and local ordinances, and comply with them all. If you sell a product that is taxable, make certain yous file for your land sales taxation ID number, collect and pay the required taxes on time.

Tax Deductions for Artists & Performers

My grandson Kameron Badgers worked on Season iii of the WGN Goggle box series Salem. The astonishing costumes for the period drama were provided by the production company — but actors and other performers who provide their own costumes tin can deduct the cost of the costumes so long as they aren't suitable to be worn "on the street". And then a period costume like this would exist tax deductible.

Revenue enhancement deductions can be quite valuable, considering they reduce taxable income for the twelvemonth. For example, someone in a 25% tax bracket tin relieve $25 in income tax for every $100 in deductions, while also saving as much as $15 in self-employment taxes for every $100 deduction from taxable income.

Detailed records and receipts are the keys to tax deductions. Some taxation deductions are available only to certain kinds of artists and performers, while others are available to any business, including an arts-oriented business organization.

To be deductible business expenses, a cost must be:

• Incurred in connectedness with your merchandise, business organisation, or profession.
• Ordinary and necessary expenses (as defined by the tax regime).
• Must not be lavish or improvident nether the circumstances (as defined past the tax authorities).

General business expenses include:

• Advertising and publicity (including the cost of required headshots, demo reels or tapes, a website, listings on online services that match potential clients with artists, and other costs associated with getting commissions, jobs, or auditions). Note that social media applications that help you promote your business – such as YouTube videos, Facebook pages and ads, and scheduling apps to manage your social media postings – are part of your advertising and publicity expenses.
• Equipment and supplies required for your business (for example stage make-upwards, artist's canvases, and musical instruments).
• Union ante, license fees (including music and copyright fees performers pay), and business organisation registration fees required for your business.
• Home Office (or studio) expenses.
  • A flat rate or per-foursquare foot deduction for a room (or rooms) in your domicile used exclusively for business concern.
  • Telephone bills for a second phone line used exclusively for your concern, including the cost of an answering car or service and long altitude.
• Legal, revenue enhancement, accounting, and professional person services for your concern (including fees paid to agents and managers). (Notation: If yous are a parent who manages a small's performing career – check with a qualified lawyer or tax professional who understands the rules that apply to child performers. Rules vary from land to state. Additional data for families who have child or teen performers or artists who can be claimed equally a dependent on a parent'southward tax return is available here.)
• Grooming (interim, voice, dance, music, art lessons, workshops required to improve or maintain your operation skills, including rental fees for rehearsal space).
• Travel expenses (for auditions, performances, meetings with potential clients, rehearsals, and related expenses).
• Wearing apparel (uniforms, costumes, special shoes, theatrical make-up, and wigs that are not suitable for street wear and are used exclusively for your concern, including alterations, dry-cleaning, and repairs).
• Meals ("Necessary business concern-related meals" are 50% tax deductible if they include direct business discussions. You must certificate the specific business purpose, place, engagement, time, and include the names of each person y'all met with and their business part.)

Some things are almost never deductible, even if they are related to a performer's ability to earn a living. For example, while body image is an important office of a performer'south image, a gym membership and workout costs are not tax deductible and are considered personal expenses. Neither is the cost of brand-up, haircuts and pilus colour, nor or manicures and pedicures.

Wear is ane of the first things that an auditor will wait for in the itemized deductions on a performer's tax render. Even if you work as a film extra, and are required to bring your own wardrobe, clothing that is suitable for street habiliment is considered a personal expense.

Only habiliment that is primarily worn for protection (such as a welder'southward mask and gloves purchased past a sculptor) or specifically used as a costume (such as a clown costume or a historical menstruation outfit) is deductible. Formal habiliment is mostly deductible by performers of both genders if information technology is required for a operation. Examples might include a symphony musician who wears a tuxedo or evening gown during performances, or an actor who purchases something to wear while walking the ruby carpeting at the Oscars.

Photographs of you wearing the clothing yous are listing equally a deduction while yous are working, with specifics every bit to the reason, appointment, and identify where you wore the habiliment are helpful in establishing the deduction. For example, if you lot bought a pair of wing-tip shoes to get piece of work equally an actress on a flick ready in the 1960'southward, photograph yourself wearing the shoes, and file the photo with the receipt for the shoes with a notation that says, "1960'south style wing-tip shoes required to work on the prepare of the 11-23-63 miniseries."

State laws may be different than federal rules, and just because something is deductible on your federal revenue enhancement return doesn't mean it'due south deductible on your state return, and vice versa. So talk to a qualified tax counselor frequently. Also, the tax code changes frequently, so just because something was deductible last year doesn't hateful it will exist deductible this year or side by side.

The almost important matter for whatsoever artist to practise to secure the maximum allowable tax deductions is to keep detailed taxation records, and do it on a regular basis. This means keeping every receipt, and writing on the receipt its business purpose, along with the date, time, and people involved in the purchase. If y'all do information technology at the time you make your buy, you'll never have to guess what an expense was for ─ and yous're prepared in the outcome of an audit.

The truth is that auditors expect artists to be disorganized. When you lot bear witness up like an efficient, organized business person, their attitude towards you and your revenue enhancement return can change rapidly in a positive fashion. Whether you're an actor, painter, sculptor, dancer, musician, author, juggler or other kind of artist, yous work hard for every dollar that you lot earn. Good record keeping will help you continue more than of what you earn. So don't crook yourself out of your own earnings past overlooking deductions ─ or missing out on them because you didn't have the right records.

Additional Tax Deductions for Professional person Writers

Many writers fear taking the habitation office deduction, but recent changes in the rules have made it easier to provide proof of home office expenses to the IRS.

In improver to the business deductions available to others, professional writers may be able to deduct:

• Research expenses such as the cost of books, or hiring a researcher.
• Outsourcing costs, such as the cost of hiring a copy editor to review your work, or a fact-checker to verify facts.
• Errors & Omissions (E&O) insurance ─ the writer's equivalent of malpractice insurance that covers slander, libel, and other potential legal problems with your writing.
• Photography expenses, such as the toll of a digital camera, and the software required to manage and edit digital photos, may exist deductible if you provide photographs with your manuscripts.
• Membership fees or ante (including the allowable portion of spousal relationship ante) paid to professional organizations such as the American Society of Journalists and Authors, the Mystery Writers of America, the Writer'due south Guild, or other organizations that provide professional person training and services to working writers.
• Subscriptions to professional person magazines, journals, and newsletters relating to writing as well as the toll of subscribing to periodicals for which you write.

Additional Tax Deductions for Professional Artists

The supplies artists use to create the art they offer for sale are revenue enhancement deductible, but adept records are essential. Some equipment — like a kiln, a estimator, or other "capital" expenses for durable goods have to be deducted according to an amortization schedule rather than deducted at once.

In addition to the business concern deductions available to others, professional artists may be able to deduct:

• Studio expenses, whether the studio is in your domicile or outside it.
• Art gallery rentals or membership costs.
• Photography costs relating to marketing your work.
• Fine art supplies and frames for the artwork sold during the year. (Any items unsold at the stop of the year are inventory, and are not deductible until they are sold.)
• Specialized equipment and supplies such as a potter'due south bicycle, kiln, clay, paints, canvas, paper, pens, and other supplies.
• Membership fees or dues paid to belong to professional artist societies.
• Fees to enter juried shows.
• Art classes, including workshops and lessons.
• Subscriptions to professional magazines, journals, and newsletters relating to your art business organisation.

Additional Tax Deductions for Musicians and Singers

Musicians often forget that the cost of marketing themselves and their music — such every bit the cost of filming YouTube videos, getting promotional headshots and photographs taken, and promoting their music through a website, blog, or iTunes, is taxation deductible.

In addition to the business organization deductions available to others, professional musicians and vocalists may be able to deduct:

• Caput shots (photographer's fees and duplication costs), resumes (printing and duplication costs), and demo reel (videographer's costs, editing, online hosting, and duplication costs).
• Musical arrangements, downloads, CDs, and recordings.
• License fees paid to other musicians/performers for the rights to record or perform their music.
• Music or voice training & lessons.
• Insurance for equipment & instruments.
• Recording studio costs.
• Rent for storage, equipment, rehearsal space.
• Repairs for instruments and equipment.
• Musical instruments and supplies.
• Sheet music.
• Accessories or consumable parts of your instrument (strings, picks, cords, reeds, drumsticks, etc.)
• Classes, private lessons, and workshops.
• Audience travel.
• Out-of-town travel for performances.
• Competition fees.
• Sound systems, microphones, and amplifiers.
• Soundproofing and electrical costs for a habitation studio or rehearsal space.
• Costumes and formal wear.
• Cleaning, alterations, and repairs for costumes or formal wear.
• Tickets and admission fees (performance audits).

Additional Taxation Deductions for Dancers, Circus & Diversity Performers

Grandson Kameron Badgers (50) and circus double-decker and performer Julio Furlon could deduct the price of the wigs, juggling clubs, props, and make-upwards used to create the characters in their comedy juggling routine, since none of the clothing or props is usable except as part of their performance.

In addition to the business deductions available to others, professional dancers, circus performers, and other variety performers such every bit magicians, jugglers, mimes, and stunt performers, may be able to deduct:

• Head shots (photographer's fees and duplication costs), resumes (press and duplication costs), and demo reel (videographer's costs, editing, online hosting, and duplication costs).
• Musical arrangements, downloads, CDs, and recordings.
• License fees paid to other musicians/performers for the rights perform their music.
• Grooming & lessons related to your fine art.
• Insurance for equipment & props.
• Rubber equipment such as aerial harnesses, nets, mats, and pads.
• Rent for storage, equipment, rehearsal space.
• Repairs for props, rubber equipment, and functioning equipment.
• Specialty shoes (non suitable for street vesture) and costumes.
• Audition travel.
• Demo reels.
• Out-of-boondocks travel for performances.
• Costumes, wigs, and theatrical brand-up.
• Cleaning, alterations, and repairs for costumes.

Additional Tax Deductions for Actors & Models

Professional workshops and classes are 1 of the best investments a working histrion can brand — and they are more often than not tax deductible. Grandson Kameron Badgers studies at Nancy Chartier's Picture Interim Studio in Dallas.

In addition to the business deductions bachelor to others, professional actors and models may be able to deduct:

• Caput shots (photographer's fees and duplication costs), resumes (printing and duplication costs), and demo reel (videographer's costs, editing, online hosting, and duplication costs).
• Script fees, including the cost of downloading sides from a casting website.
• Acting classes, workshops, and seminars.
• Audition travel.
• Out-of-town travel for performances.
• Costumes, formal wear, wigs, and theatrical make-upwards specifically used for acting.
• Cleaning, alterations, and repairs for costumes.
• Admissions to movies and plays, cable TV subscription, TV set, DVR, DVD Actor, and DVD rentals.

Photo credits: I shot the photos of my son's helmet, my son & grandson, Nancy Chartier and her students, and Julio Furlon. All other images are by the artists credited in the file name, and are used under a Artistic Eatables license from Pixabay.

Source: https://debmcalister.com/2017/04/10/tax-tips-for-actors-artists-musicians-clowns-magicians-writers-other-creative-folk/

Posted by: guntergeopenceed.blogspot.com

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