Reimbursed expenses: There's more than one way to dress a mannequin

Hi June,

I'm a designer working in fashion, snowsports, and the entertainment industry. I work on everything from costumes and sets to graphics and photography. The work keeps coming so I don't deny it. Currently I live and work in Brooklyn and have been working since 1999.

Here is my question - when working as a costume or set designer, stylist, or even in fashion, I often buy a lot of stuff - IE costume pieces, furniture, accessories, etc. These are items I'm not reselling to the public and are used exclusively for the project. I do invoice them for the cost, but its exactly at cost - more like an IOU.

Exactly how do I classify this on my taxes.

Thank You,
Jess


Hi Jess,


There are several ways to treat your props cost.


If never used again for another project then you may categorize the expense as "client costs" and the income or inflow of the reimbursement as "client costs reimbursement." The expense would cancel out the income and = 0.


If you used the props for other projects, or saw something interesting at an estate sale and bought if for future use, you could classify the income as "supplies." Include any income or reimbursement simply as income.


Sometime the choice depends on the amount of money we're talking about. For instance, $10,000 income, $100 props or $80,000 income with a $1,000 props may be treated differently than $80,000 income and $30,000 props.

Your tax pro may look at your entire tax picture and possibly choose a third method. If you props expense were a large portion of income she might treat the expense as "production costs."


Contrary to the understanding of most indies and the general public, tax preparation is not always a yes/no, this-way/ not-that-way, "exactly" situation. That's why I think indies should use the services of an indie-savvy tax pro.

Best,
June