Back-To-Business: A Taxing Situation IV - Mailbox

The Back-To-Business Series: Index

Hi there folks... did you think I'd forgotten you? Sorry about the late post today; I had to suspend this morning's answering of your questions to run to Oregon Public Broadcasting for a voice session. I'm back now, though... lets dig into the inbox and see what some people had to say about Monday's post on Tracking Tools.

... but I'm confused about mileage tracking. I thought that actors couldn't dedcut mileage for going to rehearsals and shows. JD (Athens, GA)

Ok - say it with me - I'm not a licensed tax preparer, so don't take my word for this. If you've got questions about what you can deduct and what you can't, please please please spend a couple of bucks to see a tax professional and get those questions answered. If the IRS calls your deductions into question, you want an expert by your side to defend the deductions you've taken... and I can't do that for you!

With that being said, here's my understanding of the situation: The IRS doesn't allow people to take "commuting miles" as deductible; that is, you can't write off the miles you drive from your home to your job. You can, however, write-off mileage from one job site to another. So, for example, you can't write-off the mileage you drive from home to the coffee shop you work at. If you go from that coffee shop to the bank so you can deposit the night's take, however, you can deduct that mileage (you just can't deduct the mileage from the bank back home.)

Now, as actors our job sites are casting offices, theaters, film sets, and the like. We have to follow the same rules as everyone else - we can't deduct the mileage we drive from home to those job sites. As sole proprietors of our own businesses (remember, that's what filing a Schedule C makes you), though, We can deduct the mileage we drive from our offices (one job site) to these other sites. The key to justifying this mileage is to be sure that you've got a qualified home office set up.

Now, again, I'm not a licensed tax professional - you should definitely consult with a licensed expert to be sure your home office qualifies for the home office deduction. If it does, then all mileage from your home office to your job sites is deductible - when you're doing a Schedule C job. When you're doing a W-2 job, you've been hired as an employee by the production company, so all mileage from home to the job site is considered "commuting miles," and is therefore not deductible.

One more time... consult a licensed tax professional if you've got questions about the specifics of the mileage you drove this past year...

... I don't get how my calendar is going to help me "justify" my expenses. It's just got my appointments in it, doesn't it? BR (St. Louis, MO)

... What do you mean about meetings? I'm not Sandra Bullock, "taking meetings" with big-time producers to pitch my latest movie. I'm just another Portland actor out looking for work. AF (Portland, OR)

These two questions actually relate to each other. A lot of the "business" of show business doesn't take place on stage or in front of the camera. It doesn't take place in the rehearsal room, or at your agent's office. A lot of the "business" of show business takes place at parties, bars, coffee shops, and restaurants.

It's been said that show business is a "personality" business - that how you come across to producers/ directors/ casting agents in informal situations (such as Portland's weekly Leverage viewing parties, or at film premieres) goes a long way toward your getting work on that next project - or on a project a year down the line. While people outside "the business" look at film screenings and industry parties as glamorous events where pretty people rub shoulders, those in "the business" look at them for what they are - business events. Opportunities to get to know the people who have the power or influence to get you hired on that next job. Opportunities to be seen, and to promote yourself. Like any other activity geared towards building your business, what you spend on these events is a legitimate deduction.

See, you never know who's going to help you get that next job. It could be that director you met at that party that actor threw... or it could be the young actress you go out to coffee with after rehearsal. Or, it could be the grip you introduced to a the aforementioned director over lunch - he hears about an opening on another project, and he could very easily put in a good word for you. Just about all our activities with industry contacts can lead to future work... which makes all of our lunch/ coffee/ bar dates business meetings - if you talk business with those contacts.

Which brings us back to our calendar... noting every meeting you have with industry contacts helps you to justify the miles you drive to get there, the meal and/ or drinks you buy (only half of that amount is deductible, though...), your parking, etc... an actor friend calls you up on the spur of the moment and says, "Hey, lets grab lunch?" Go - but be sure to note the meeting in your calendar! Not only will it help you justify the expense - it'll remind you about the meeting when you're hunting for deductions at tax time!

And, finally, here's one I get asked a lot!

You're always out there pimpin PerformerTrack - do you work for them or something? SD (Antioch, TN)

No, I don't work for HoldonLog, the company that makes PerformerTrack. I'm just a very satisfied user of the web-based system - it's been an invaluable tool for me over the past three years. Since I started using PerformerTrack (and its predecessor ActorTrack), I've started thinking of my acting career as a business - in fact, a lot of the information I share with actors in my Personal Business Coaching sessions and here on the blog are derived from the lessons I've learned by using those systems.

We'll talk more about PerformerTrack in next Monday's post... and don't be surprised if you hear more about it in coming weeks as well. It really is a great way to take charge of your career!

Until then...

Let's get to work!

-Harold

Back-To-Business: A Taxing Situation IV - Tracking Tools

The Back-To-Business Series: Index

We're going to finish up our discussion on taxes by looking at some tools to help you track your career activities throughout the year. A lot of the actors I work with in private Business Coaching sessions spend weeks every March and April trying to reconstruct their activities from the past year - pulling together receipts, going through old rehearsal schedules, and compiling list upon list to transcribe onto their tax forms. Tax season doesn't have to be so frustrating - a lot of sweat and effort can be a avoided if you'll just take a little time during the year to log your income, expenses, and career activities; that way when April rolls around you'll have all your information in one place so you can gather it together with ease, get your taxes filed... and getting back to doing the work you want to do: auditioning and performing!

>> You don't have to spend a lot of money on these tools. We've already talked about one cheap-and-easy-to-use option that makes tax time easier - an Accordion File can help you separate your receipts into deductible categories (be sure to note the purpose of your expenditure on the receipt... more on that in a minute). Other less expensive tools like these can help you keep track of expenses you don't get receipts for - like the miles you drive to conduct business (including trips to audition, perform, meet with producers and directors, check your mail, go to the bank...)

That mileage is a legitimate deduction (within certain boundries - be sure to consult a licensed tax preparer to get all the details.) The thing is, you have to keep track of it - and you have to produce a log to prove you drove those miles for legitimate business purposes if the IRS asks ("asks" is such nice term for an audit, don't you think?) At the very least, be sure to note the date of the trip, the miles driven, and the purpose of the journey. To be totally prepared to justify your mileage to the IRS in an audit, you should also list your car's odemeter reading at the beginning of the year, the beginning and the end of the each trip, and at the end of the year.

Sounds like a lot of information to record in a simple notebook, doesn't it? Maybe one of these is a better investment - for a little more money you can get a pre-printed booklet to fill out every year. Just keep it in your car's glove box, and pull it out every time you make a business-related trip!

>> Did you notice that word I used a couple paragraphs back - justify? I hope you never have to go through an audit, but if you do the IRS is going to expect you to justify the expenses you've written off on your taxes - prove to them that the money you spent was used to conduct or build your business. That's why we make notes on the receipts that we save every year - if anyone asks, we can tell them (for example) WHO we had coffee with and WHAT was discussed and HOW that meeting contributed to our performing business.

An actor's most important tool can also help to justify his or her expenses: the calendar. You probably already use a calendar to keep track of your auditions and appointments (at least I hope you do!) - whether it's small and pocket-sized, a larger "Day Runner" style, or an electronic PDA (I myself have opted for the "Smart Phone" option - my Blackberry Storm carries all my calendar and contact data in one compact package. It's very handy!) Noting every class, audition, performance, meeting, or appointment in your calendar - yes, EVERY one - will give you extra amunition in case you have to justify your expenses to the IRS.


Lets face it - the IRS knows that anyone can write a note on a receipt at any time, claiming that a lunch at Kornblatt's Deli was a business expense and not a personal one. Having that lunch documented in your calendar, though, and noting who you're meeting with and why is going to help support your receipt - and make it look a LOT more legitimate if the IRS "asks."

>> Of course, the point of all this was to make tax time easier, not harder... all this seems like a lot of work, doesn't it? Making notes on receipts, filing them, writing appointments in your calendar, noting your mileage... and that doesn't even begin take into account the work of pulling all that data together at tax time. Isn't there an easier way to get all your tax information together in one spot?

Of course there is... and regular readers of my blog have probably already figured out what I'm going to recommend:

Expense Tracking Made Easy from PerformerTrack on Vimeo.

HoldonLog's PerformerTrack "webware" combines all the tools I've mentioned above - your calendar, your mileage log, your receipt file... and it makes tax-time a breeze by letting you print out reports in April (or whenever you feel like it) that breaks down your income and expenses. You still have to use the system - entering in appointments, income and expenses... but entering it in once gives allows you to access that data any time, and saves you the trouble of stacking paperwork and transcribing at tax time.

It also saves you the trouble of going through those bank statements I mentioned last week... entering in your income as it comes in produces a report of everything you've made in the past year. An extra bonus for union actors - income can be categorized by union, so at dues time you don't have to hunt for pay stubs to figure out how much you owe (we'll get into that a little later...).

Next week I'm going to take an in-depth look at PerfomerTrack, and show you how using the system can help make tracking your income and expenses a snap. If you don't want to wait, though, visit the http://www.performertrack.com/ and take a look for yourself! PerformerTrack is a subscription-based service (though it doesn't cost much - a yearly subscription works out to just $9.95 a month), but I can help you out there... Because I believe every actor can benefit from using their system, I've worked it out with HoldonLog to offer my readers a special deal. You can save 20% off a one-year subscription to the system by entering the coupon code Portland9 into the check-out screen. That drops the subscription price down to $7.96 per month... a lot of Portlanders spend that in two days at the coffee shop.

As always, feel free to email me your questions or comments... or send them to me on Twitter! For now...

Lets get to work!

-Harold