If you are a performing artist, such as an actor, dancer or musician, payments that you receive from someone who is not your employer (for example, payments for freelance work) may be considered income from self-employment and reportable on Schedule C, Profit or Loss from Business. You may deduct all associated expenses to your self-employment income on your Schedule C. Any expenses you have from your W-2 job are not deductible.
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If you are self-employed, you may receive Form 1099-MISC, Miscellaneous Income, showing amounts you were paid. If you are self-employed and your net earnings are $400 or more, you must file a tax return and pay self-employment tax on the income you report on Schedule C. In addition, you may need to make estimated payments to cover the amount of self-employment tax or income tax associated with the income you report on Schedule C.
Unreimbursed, work-related expenses are attributable to being self-employed, they may be deductible on Schedule C. You should keep receipts to substantiate your expenses. Examples of some of the work-related items you may be able to deduct include:
- Promotional expenses such as business cards, audition tapes, professional publicity photos, resumes, portfolios, and website development costs
- Amounts paid to others such as pay for a personal assistant, agent or manager commissions, and attorney fees
- Travel expenses such as travel for auditions and other job searches, business meetings and seminars, professional society meetings and seminars, and business assignments; and the costs of attending these meetings and seminars
- Purchasing, cleaning, and alteration costs for costumes if they are required for work and not suitable for everyday wear
- Stage make-up and other beauty aids used for a performance or other promotional events and appearances
- Educational expenses such as voice and other lessons, and continuing education
- Other expenses, such as subscriptions to professional journals, union and professional dues, business licenses, business gifts, and home office or part of your home used regularly and exclusively for your work
Taxpayers in the entertainment industry may incur expenses to maintain an image. These expenses are frequently related to their physical appearance, such as expenses for clothing, make up, hair care, and physical fitness. These expenses are generally found to be personal because the inherently personal nature of the expense and the personal benefit are considered to far outweigh any potential business benefit. No deduction is allowed for expenses for clothing, general make up, hair care, or physical fitness to maintain an image.
You may be able to reduce your taxes by deducting unreimbursed, work-related expenses. As an employee, you may qualify to deduct your work expenses as a dollar-for-dollar adjustment to income, instead of as 2% limited miscellaneous itemized deductions, like most other types of employees. To qualify, you must meet all of the following requirements:
- You perform services in the performing arts as an employee for at least two employers.
- You receive at least $200 each from any two of these employers.
- Your related performing-arts business expenses are more than 10% of your gross income from the performance of those services.
- Your adjusted gross income is not more than $16,000 before deducting these business expenses. If you are married, you must file a joint return unless you lived apart from your spouse at all times during the tax year. If you file a joint return, you must calculate requirements (1), (2), and (3) separately for both you and your spouse. However, requirement (4) applies to you and your spouse's combined adjusted gross income.
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