Tax Write-offs, Receipts and Audits

Our Actor's Tax Expert Shares His Tips

ACTOR TAX MYTHS: THE SEQUEL

We’ll continue in this episode to look at some of the more widespread tax issues which many actors believe to be true. Unfortunately, the Internal Revenue Code (the codification of all federal tax laws) holds a differing opinion–and that differing opinion prevails at audit time.

Let me remind you once again that it is extremely important to know your source when you are offered tax advice, and unless your source is authoritative, to check it out before betting your hard-earned dollars on an error.
Body image is such an important and integral part of an actor’s persona, and staying in good shape so important to many acting careers, that is would be logical to assume, as many actors do, that we can take our general gym and workout costs as deductions.

The mistake here is applying ordinary logic to tax situations. Logic is simply not a criterion to tax law, and in this case, as in many others, the IRC refutes actor logic.

In short, most general gym and workout costs are considered to be personal expenditures, and therefore are NOT deductible. There are a few special circumstances where such costs could be deducted. For example, a male actor auditions for a role and is told he will be cast–if he can buff up before shooting so that his enhanced manly physique will film well. And further, the producers refuse to pay the costs of the required buffing up.

In this specific incident, or one very similar, the costs would be deductible. But your monthly fees at Gold’s or Bally’s, and any attendant costs for such things as a personal trainer, are sadly your own responsibility.

There is a somewhat analogous situation for hair styling/cutting and make-up costs. The general expense of year-round hair costs are personal expenditures. If, to secure a role, a blonde becomes a redhead, the specific costs relating to that tint is deductible. But if you decide later you like yourself as a redhead, and decide to maintain the coppery hue year-round–you are on your own.

The objection I hear (almost daily) on this subject is that we have to look like our headshots, and it is just not fair not to be able to deduct expenses to achieve that end. Just remember-fairness, just like logic, has no part in the IRC. Usually, if there is something fair in the Code, it is because they haven’t found it and expunged it.

In a twisted-logic way, the IRS thinks they are being fair in re the hair rulings–fair to the vast majority of the taxpaying population who cannot even think about deducting their appearance and image costs.

As you might guess from my earlier comments, makeup is a similarly limited deduction. Theatrical makeup is deductible, because it cannot be used (at least normally) as street wear, but general makeup costs are not permitted. If you pay a makeup artist for a headshot session or an audition, that specific set of costs is deductible–but everyday blush, lipstick, etc., is not.

Manicures and pedicures fall within the same category. If you are a hand model or a foot model, that special circumstances would qualify the deduction, but for most of us, keeping our nails natty is an expense we must bear without deduction assistance.

The next item to discuss has a certain kernel of truth–but there are limitations. I am referring to the research expenses we incur by paying for admission to movies and plays.

This is somewhat of a gray area to the IRS, but one, in an audit situation, which can usually be sustained–if some care has been taken in record keeping. Although the cost of most admissions falls below the $75.00 limit required for a written receipt, I strongly recommend that your keep your ticket stubs. Staple them to an 8/12 x ll sheet of paper, and next to the ticket, put a solid business reason why you saw that particular movie–to observe the director’s dialogue technique, for example.

The IRS seems to hate allowing movie or theatre admissions as a deduction, but with good records and good reasons, they will.

They also hate allowing cable and/or satellite costs too–but again, the arguments for taking the deductions are compelling. But don’t, please, try to claim your full bill as a business expense. This is a classic example of how it pays off to take a reasonable percentage as business and the balance as personal. Much more than 50% tends to make auditors growl and get out the red pencil.

Remember, please, as always, these deductions need to be sustained by either receipts and/or records.