<p>I'm getting my d's things together hoping to get fafsa in soon but have a question. Does anyone know anything about how an actor files? She got a 1099 for her summer shows ($3000) but also made money temping and got a two W2s for that ($1000).
I'm itemizing and am able to show no income at all with all of her receipts including travel, training, music, monologue books, dance shoes, etc... Should I just deduct up to that 1099 amount or can I include the w2's as an actor's income as it is what she had to do in her down time? This of course leaves her with nothing as far a income.
Also how much of her tuition/college acting books can/should be included?
We have an accountant for my husband as he is self employed, but I was hoping to get away with a number for all of us early on to do the fafsa, without getting everything over to him and waiting...
Any accountants in the CCMT house? I'm sure others will be in my d's boat soon if not already :O</p>
<p>I'm not an accountant but I believe that unless she earned over $5000, she doesn't owe any taxes (at all) and so no need to itemize: file the EZ form for her -- she should get a refund for any taxes which were withheld. Also, pretty sure that if you claim her as a dependent on your taxes, the tuition costs are tax credit for you, not her. But, as I said, I am NOT an accountant, so please confirm this info! :)</p>
<p>I hope that at least one accountant will respond to this question! I don't know anything about deducting college costs, but here are some ideas about tax preparation for actors.</p>
<p>In case you are not able to file the 1040EZ, I believe that income reported on 1099s is entered on Schedule C, Profit or Loss from Business, where you can deduct expenses such as the ones you mentioned that were incurred in connection with those jobs and actually come up with a business loss for the year.</p>
<p>Income reported on W2s is entered on the 1040, and any expenses associated with those jobs is entered on Form 2106, Unreimbursed Employee Expenses. These expenses must exceed 2% of adjusted gross income in order to be deducted. (In your daughter's case, unless her temp jobs were in the acting profession, it seems unlikely that she would have expenses to be deducted here.)</p>
<p>In any case, it's a good idea for young actors to get in the habit of saving all their receipts and to keep them sorted according to the associated type of work--employee or self-employed--since they will surely experience both throughout their careers. </p>
<p>Here are three books which you may find helpful in the future:</p>
<p>The New Tax Guide for Performers, Writers, Directors, Designers and Other Show Biz Folk, by R. Brendan Hanlon</p>
<p>The New Tax Guide for Artists of Every Persuasion, by Peter Jason Riley</p>
<p>Tax Deductions A to Z for Writers, Artists, & Performers, by Anne Skalka</p>
<p>Good luck! Taxes are such a nightmare.</p>
<p>there is someone who posts on the Theatre or Music thread... I think he goes by the name "taxguy" he probably could help.</p>
<p>I think there are some differences between what one can do if they are independant from parents and what one can do if parents still claim them as a dependant... but I may be wrong about that.</p>
<p>Hi Melsmom:</p>
<p>Not an accountant either, but let me put in a few comments.</p>
<p>Check out one of the well-known software programs out there. These are very very helpful in figuring out things. It fills in the numbers, it asks the right questions -- hey it even had a question about whether you are in the arts field (apparently there is a small tax break). </p>
<p>Yes, you need to input each w-2 and yes you need to input the info from the 1099. As mentioned above, the odds are you (she) will not end up owing taxes, unless there is some interest income elsewhere coming in. </p>
<p>And by the way -- and this is a big point -- consider taking some funds, perhaps $500 and placing them in a Roth IRA now. She will thank you for it years from now when the interest has accumulated. </p>
<p>If she was earning more money, things such as transportation to auditions, etc. could be deductible -- but the chances are you may not need these deductions. It really depends, because she is not (I assume) independent from you. You are presumably taking her as a deduction. The computer program takes all that into consideration. </p>
<p>As far as college scholarships, the program knows how to handle. Most are not taxable. If she has income (work study) that is taxable. There is also a small deduction on tuition costs... better than nothing. </p>
<p>The $50 investment in the program is well worth it. </p>
<p>-- Donna</p>
<p>PS... Again assuming she is a dependent on your tax forms, that is the place that the small education deduction or credit is taken. It doesn't go on her tax form.</p>
<p>I forwarded this question to my wife, who prepares taxes for H&$ Block. It's all cryptic to me, but hopefully this helps.:</p>
<p>Put the w-2 income in as usual wages. Put the 1099 on a schedule C, but then you can subtract all the expenses to get to 0 if that's the case. IF those expenses are greater than the 1099 income, she can use it against her W-2 income as well. but still needs to file it...she can file free on freetaxusa.com</p>
<p>if she is a dependent, tuition and books go on parents return...tuition and fees are deductible or can be used for a hope or lifetime learning credit.
books and room and board are generally not helpful in the tax area, I believe.....there may be exceptions.</p>
<p>If she is still a dependent, she can take her standard deduction, but not her personal exemption. I assume she is still a dependent, that's why parents are doing fafsa</p>
<p>Books, room & board can't really be 'itemized' as expenses...they have to go on the schedule C....itemizing is schedule A, and that's for deductions, whcih will not exceed her standard deduction...</p>
<p>for the tax CREDITS (hope and lifetime learning)...books are okay, but room and board is not:
Qualified expenses do not include room and board, insurance, transportation, or other similar personal, living, or family expenses. Qualified expenses may include fees for books, supplies, and equipment only if the fees must be paid to the school for the student's enrollment or attendance. In addition, qualified expenses may include student activity fees if the fee must be paid to the school for the student's enrollment or attendance.
Tax</a> Topics - Topic 605 Education Credits
for the deduction for tuition and fees, which is limited to 0, 2000, or 4000 depending on income, the rules EXCLUDE books as well
Qualifying Education Expenses
Expenses for tuition, registration fees, and other required fees are qualifying expenses for the Tuition and Fees Tax Deduction. Do not include the cost of books, supplies, software, room and board, or other miscellaneous expenses for schooling. Qualifying expenses are reported to you and to the IRS using Form 1098-T.
Tuition</a> and Fees Tax Deduction
however, like i said, this needs to go on the parents form, not the kids form.
you can take EITHER the tuition and fees deduction OR take one credit or the other depending on situation. Hope is the best credit, but can only be used for freshman or sophomore. Lifetime learning is good too.....but income limits are less than for deduction.</p>
<p>Here's a bit more:</p>
<p>Probably can't deduct training as business expense..if she had enough deductions for schedule A it would go there, but she won't be able to do that. everything else should be able to be taken as business expense on schedule c (those 1099's are like self employment...contract work.</p>
<p>OK, so I should fill out the 1040(a?ez?) with the schedule c, showing that she had a business loss, which will cancel out her W2s. She is a dependent so I won't have her deduct any tuition/room/board, and she really doesn't need to to get to $0 anyway. Her training however included a monlogue coach and voice teacher for a few lessons over the summer. Those she should be able to claim I think.
It really hurts the kids to show much income on the fafsa form. They really up that EFC when they see it, so my main objective is to keep that number low in order to get what she needs for school. Is it unusual to be paid with a 1099 in this business? I rather like it, as the expenses really add up for these kids and it's great to finally be able to claim them.
Thanks for all your info. I hope to be able to get to renew the fafsa by the end of this week, so if anyone thinks I'm going about it wrong, please let me know!
Thank you :)</p>
<p>yes, use a 1040 I think...you might be able to do 1040A, but definitely not ez...</p>
<p>You can probably take off the voice teacher stuff as a business expense if your daughter can claim it is directly for her performances...(like if she works on her current music perhaps)..I totally understand about getting to 0. we have the same issue. Actually, training is deductible on schedule c for self employed, so she ought to be able to do that.</p>
<p>Thank you so much and tell your smart wife I appreciate the advice flhope! How I wish my d could somehow double major/minor in accounting...actually looked into it for her, but she would have to do an extra year as it's in another "school" (business as opposed to the arts). Such practical stuff to know, and a great way to be self employed while waiting for the next big break!</p>
<p>If you are a customer of State Farm Insurance, you can access Turbo Tax for free. PM me and I will give you details.</p>
<p>Wow, my d has her renter's insurance thru them, does that count? I'll pm you...</p>
<p>PS, I don't care how much razzing I get from my family for checking in here all the time...I just love CC!</p>
<p>I do happen to be a CPA and do tax work for a corporation. The only individual taxes I do are for my family, but I have several family members who are self-employed. I share the below with you from a personal and not a professional perspective (it's been way too many years since I worked in public accounting).</p>
<p>Never assume you don't owe taxes. Fill out the 1040 information on TurboTax (well worth it, as people have mentioned above). It will walk you through everything. </p>
<p>Also, I believe to get the new tax rebates from the economic stimulus package (just passed by Congress), one must file a tax return, even if nothing is due.</p>
<p>If they receive a W-2, it will include withholding, so you definitely need to file, if for no other reason than to get the withholding back as a refund. It's very hard to take business expenses against W-2 earnings (see alldressedup above).</p>
<p>Earnings from a 1099 go on Schedule C, and this will probably require you to do a regular 1040 rather than a 1040 EZ. This is where you can take deductions and why you need to keep receipts. Deductions that easily come to mind could include fees to audition for summerstock work, headshot originals and duplicates, special dance clothes or shoes or any other costume requirement you pay for. You could consider taking a deduction for training, such as voice or dance, and for travel to auditions, but I usually have not done so (as I've been able to get his earnings low enough otherwise that he didn't owe any taxes). </p>
<p>Be aware that earnings on Schedule C are also subject to a very hefty self-employment tax (both sides of FICA and medicare). This applies only over certain thresholds. If you use TurboTax , it will calculate all this for you.</p>
<p>A very important thing to remember is this - once you start earning enough money to actually owe taxes from 1099s and Schedule C's, it's very important to get tax advice and start paying in quarterly estimated payments for federal and state taxes. There are exceptions to underpayment penalties, so you will want advice.</p>
<p>In my mind, the goal for a college student is to find enough deductions to zero out their taxes!</p>
<p>Ericsmom,
You're right about TurboTax being helpful, tho you do have to have some knowledge of what you're doing, more so than me apparently. </p>
<p>I went through all their questions and it started getting sticky when it came to her car and using it for travelling for her occupation. They wanted to depreciate it and so she came away with this HUGE amount for deducting.
It then asked me if I wanted to apply some of her HUGE loss of income for next years taxes, so I said sure...not knowing that it would not deduct the W2 income first. This involved some other forms and yada yada I had no clue.</p>
<p>So although her taxes owed is $0, as you stated above, that is not really good enough because it still shows her w2 income for 2007! That of course will up her EFC contribution. NOT GOOD when it comes to getting aid for college.
Oh well, maybe they will kick it back as turbotax stated that the IRS will review and kick back in a couple of days if they don't like something about the submission.
If not, she has a $3000 deduction toward any 1099 income for next year...I hope she can use it!</p>
<p>Upon further reading about the new economic stimulus package, I don't think anyone will be able to get rebates for college age kids, as long as the parent claims them as a dependent. To get the $300 per child, the child must be under age 17. If a young adult is claimed as a dependent on another return, he / she cannot qualify to get their own refund.</p>
<p>Melsmom, I'm not a tax professional but my son is a classical musician with a BM in performance in May '07, and is taking a year off and will apply for grad school in performance for '09.</p>
<p>For the car expenses, if you own the car (not d), and are paying insurance, taxes, gas, mileage any auto expense cannot be claimed by d (or you).</p>
<p>When s was in undergrad, we claimed him as a dependent for IRS purposes, and his self employment income from performing was minimal, was in the form of 1099's, and even with a part time job and a W-2, he owed no taxes.</p>
<p>This year he had W-2's from a non-music part time job, W-2's from a regional pro orchestra (paid chair), and contract studio teaching. He also had 1099 income as a musician for contract teaching and gigs.</p>
<p>We still claimed him as a dependent as we provide more than 50% of his support. Because he took numeous pro auditions requiring travel, attended several summer festivals (air, ground transport, his personal vehicle mileage) he had more than enough offsetting expenses to show his Schedule C bottom line as a loss. This loss could have been used to reduce his W-2 earnings and result in a lower tax liability for him.</p>
<p>We did not choose to take all his deductions against his self employed income, and showed him making a small profit, with a slightly higher tax liability. He still got most of his federal w-2 witholding back.</p>
<p>A couple of points to consider:</p>
<p>-You do not have to take all deductions against se income. Just because it is a legit expense does not mean you have to include it.</p>
<ul>
<li>I say this as the IRS will look at Schedule C losses over a period of time (three-four years) and may decide to consider that income a hobby, and not self employment, and disallow any offseting expenses. You might want to save Schedule C losses for the years she really needs it (after graduating and trying to break-in to the business).</li>
</ul>
<p>-There are specific rules for performing artists in the current laws that do allow for certain professional meals and travel against performing W-2 income as a higher than normal (as being defined as the "typical") business expense, and requires a seperate form or worksheet.</p>
<p>-This tax thing is extremely tricky, and son's income has been low enough to not have any major ramifications if I make an error. Personally, I'm going to do his taxes again next year and until he's out of grad school unless I find his record keeping shoddy, his income from both music and non music high enough for a mistake to be costly (timewise and financially), or the tax code gets more confusing than it already is.</p>
<p>-I'd suggest d start talking to actively performing peers and begin to get a couple of references for names of good performing arts tax preparers/accountants for the future.</p>
<p>Good luck.</p>
<p>I agree with the above - don't take expenses to the extent they would make the Sch. C a loss. This is why I never take all expenses that could be allowed.</p>
<p>Great advice for future reference. I found it really doesn't take many deductions for that taxable income to show very little, as deductions in this business are really an every day occurance. The traveling expences alone this year for my d to get to two regional auditions will be major and that's not even counting what her expenses will entail should she even get a job from one (she better!). Is it common for most summer theatre programs to pay with 1099s?
That's too bad about the tax rebate, it sounds as if our young working adults are getting left by the wayside.
Now, on a completely different self employment track, is there any way possible to claim rent for a summer cottage as an expense for a cabinet making business?? LOL</p>
<p>Melsmom- One thing I did not mention and I recommend you seek the advice of a tax pro, but what we did NOT do was to deduct any travel expenses as the result of auditioning for undergrad college admissions. My son did take travel expenses this year against his pro audition; audition expenses for grad school admissions we did not take.</p>
<p>I'm not sure how the IRS views college related audition expenses (why would not everyone regardless of major then be able to deduct travel expenses to visit schools?). I would tend to err on the side of caution.</p>
<p>As for 1099's, son rarely receives them as a sub, or for gigs. He gets a couple for contract teaching at summer programs. It would depend on the amounts, as I believe there are IRS guidelines as to when an "employer" has to send one, and I believe it is based on amount paid to the independent contractor.</p>