Actor's Expenses

June --

I know it's late in the game here but I just found your site and would like to clarify if possible....My wife is an actor and receives W-2s for all the work she does. When using TaxCut, can/should I create a business for her in the Income section, and subsequently deduct her expenses there? Or should/can these deductions only be done later in the Deductions section? I always thought that being a working actress, she owned her own business, but if she receives W-2s, it seems she actually technically is an employee on each job huh? Would I be able to save more money one way or the other?

Thanks for your help...the site is already so helpful!
Ry


Hello Ry,

A couple of points before I answer your question: If you've read my writing on my website, blog or in my books you may already know that I have found no tax preparation program that does the job right for indies -- the programs are geared for employees and don't do the fine-tuning required for self-employeds; I think indies should not do their own tax returns -- they usually cheat themselves; I don't give tax return preparation instruction to indies.

That said, here's how it works for all my actor clients. Their income comes in as both wages for employees and as freelance income on 1099s. Almost always, unless they are doing a showcase or work for some small live theatre, the income comes in as W-2 wages. This is not self-employed income. There is no self-employed business. The expenses must be deducted as they are for all other employees. However, depending on the actor's income and expense amount these expenses may be deducted on the front of the tax return as an adjustment-to-income. This is a much more tax advantageous treatment.

If the actor receives income as both an employee and as a self-employed then expenses must be split between the two.

I'm happy my site is helpful. Please tell your friends and colleagues.

Best,
June