Tax Question--Actress
I am trying to help my daughter complete her income tax return. Before she graduated from college in May, she made several trips to New York City to audition for plays, and we are trying to figure out whether or not she can deduct the related expenses (flights, cab fares, photographs, etc.) on her return. She has filed Schedule C in the past, but only when she has actually earned some self-employment income from acting. She did eventually get work with two different companies through her New York auditions, but she has received W-2s from them, so those incomes cannot be reported on Schedule C. Her other option could be to enter her expenses on Form 2106, Employee Business Expense, but that doesn't seem quite right, either, since she incurred the expenses before getting the work. I would appreciate any guidance you can give me.
Your daughter can deduct most expenses connected to looking for work, whether or not she gets the job, on Schedule A, line 20. Meals are not included in these expenses because the IRS feels that you have to eat, whether you are home or away from home unless she took someone out to eat that was connected to that job interview. This instance is most unlikely but it could happen.
If your daughter ever finds herself in this position, tell her to put this expense on a credit card or get receipt. On the back of the receipt put who she had dinner with and the topic of conversation. This will help, in case of an audit.
Because this a select area of expertise, if she ever gets a fairly substantial contract, tell her to contact someone who deals in this field because it can be tricky.
Re: Tax Question--Actress
Thank you so much for your reply. The information you provided will help us figure out whether my daughter's expenses exceed the $4,700 standard deduction for a single filer. She has met once with an accountant who specializes in preparing entertainers' returns, and, after reading your advice, I think it might be best that she go back to him if she decides not to take the standard deduction. She will still have to prepare six state returns herself from a tour she was on, because the accountant told her it wouldn't be worth it to pay him to do them. Again, thank you for your assistance. I really appreciate it.
Re: Tax Question--Actress
There is a weird exception [IRC 62.(a)(2)(B)]to the rules that would let her deduct her expenses above the line as though she was self employed. If her gross income was under $16,000*, at least 10% of it was from acting, and 2 employers paid her at least $200 each for acting ,even though it's W2 she might be a "qualified performing artist".
*This was the 2001 limit. I'm at home exhausted right now, but she can look up the details at irs.gov.
Re: Tax Question--Actress
Thank you for checking on this; it was very nice of you to go to so much trouble. My daughter actually exceeded everyone's wildest expectations and earned too much last year to fall into the "qualified performing artist" category. Her expenses did exceed the $4,700 standard deduction, but she didn't want to return to the accountant she had visited earlier. She had overheard him advising a dancer to claim she had a ballet barre and mirror in her home, despite the dancer's protests to the contrary. So, my daughter and I have muddled our way through the return on our own. Thanks again to everyone for helping!
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