Monday, December 26, 2016

Welcome to Actor's Tax Tips!

Archived below are posts from past years, which I hope you'll find useful.  

FYI, there will not be a 2017 edition of my online book, The Actor's Tax Guide.  Please check my Facebook page for information about possible tax webinars or online courses on Udemy.  

Thanks again and best wishes!

Wednesday, April 29, 2015

Tips on filing an amended return

Tips on Filing an Amended Return

What should you do if you already filed your federal tax return and then discover a mistake? Don’t worry -- you have a chance to fix errors by filing an amended tax return. Here are 10 tips from the IRS about filing an amended tax return.

1. Use Form 1040X, Amended U.S. Individual Income Tax Return, to file an amended tax return. An amended return can’t be e-filed -- you must file on paper.  Download and print out the form and instructions at

2. You should consider filing an amended tax return if there is a change in your filing status, income, deductions or credits.

3. You normally don’t need to file an amended return just to correct math errors. The IRS will automatically make those changes for you. Also, do not file an amended return because you forgot to attach tax forms, such as W-2s or schedules. The IRS normally will send a request asking for those.

4. Generally, you must file a 1040X within three years from the date you filed your original tax return or within two years of the date you paid the tax, whichever is later. Be sure to enter the year of the return you are amending at the top of Form 1040X.

5. If you are amending more than one tax return, prepare a 1040X for each return and mail them to the IRS in separate envelopes. You’ll find the appropriate IRS address in the 1040X instructions.
6. If your changes involve the need for another schedule or form, you must attach that schedule or form to the amended return.  You can obtain forms and schedules for past years at Click on “Forms & Publications” and then click on the tab for previous years when you get to the Forms & Pubs page.  

7. If you are filing an amended tax return to claim an additional refund, wait until you have received your original tax refund before filing Form 1040X. Amended returns take up to 12 weeks to process. You may cash your original refund check while waiting for the additional refund.

8. If you owe additional taxes with the 1040X, file it and pay the tax as soon as possible to minimize interest and penalties.

9. You can track the status of your amended tax return three weeks after you file with the IRS’s new tool called, “Where’s My Amended Return?” The automated tool is available at and by phone at 866-464-2050. The online and phone tools are available in English and Spanish. You can track the status of your amended return for the current year and up to three prior years.

10. To use the online “Where’s My Amended Return” tool, enter your taxpayer identification number (usually your Social Security number), date of birth, and zip code. If you have filed amended returns for more than one year, you can select each year individually to check the status of each. If you use the tool by phone, follow the prompts.

The current Actor’s Tax Guide is available throughout 2015 at  If you need to file a corrected return for a previous year, email me at to get past editions of the Tax Guide, going back to 2009. 

Sunday, April 19, 2015

Plan now for next year! Tax Guide available through 2015

Plan Now for Next Year!

Even though you may be worn out from working on your 2014 tax return, now is a good time to plan for next year, especially in the area of keeping good records of your business activities. As you went through your records for last year, what gave you difficulties? Are there some expenses you forgot to record, or receipts you wish you had saved? While these things are fresh in your mind, use your experience now to make things easier for next time.

If you've had trouble accounting for expenses, maybe you need to figure out a new way to keep track of things. I've always been an advocate of hand-written, on-paper records. Even in this new age of electronic record-keeping, the most compelling evidence of your business expenses is old-fashioned: written in your own hand, and at the time the expense was incurred. If you're audited, that kind of record carries the most weight. 

As a tax preparer friend of mine says, "You can't write it off if you don't write it down!"

The process of preparing your tax return also gives you a good opportunity to analyze your business activities and plan for the future. Take another look at your professional expenses. Analyze which expenses were effective in getting work. Are you overspending in some areas that don’t really advance your career? Should you be spending more to promote yourself? 

Now that you’re thinking about what kinds of things qualify as business expenses, you can be on the lookout for deductions. At a SAG Foundation tax seminar in January of 2013, Actor and Tax Practitioner Beth Lynn Kelly said that you should always be thinking, “Is this for my career?” It’s remarkable how many of your regular day-to-day activities are also legitimate business expenses.

Get more ideas from The Actor’s Tax Guide, which will be available through 2015 at

Tuesday, April 14, 2015

Eight facts on late filing & late payment penalties

Eight Facts on Late Filing & Late Payment Penalties

April 15 is the deadline for most people to file their federal income tax return and pay any taxes they owe. The IRS may assess penalties for both failing to file a tax return and for failing to pay taxes by the deadline.

Here are eight important points from the IRS about penalties for filing or paying late.

1. A failure-to-file penalty may apply if you didn’t file by the deadline. A failure-to-pay penalty may apply if you didn’t pay all of the taxes you owe by the filing deadline.

2. The failure-to-file penalty is generally more than the failure-to-pay penalty. You should file your tax return on time each year, even if you’re not able to pay all the taxes you owe by the due date. You can reduce additional interest and penalties by paying as much as you can with your tax return. You should explore other payment options such as getting a loan or making an installment agreement with the IRS to make payments, which will reduce the interest rate.

3. The penalty for filing late is normally 5 percent of the unpaid taxes for each month or part of a month that a tax return is late. That penalty starts accruing the day after the tax filing due date and will not exceed 25 percent of your unpaid taxes.

4. If you do not pay your taxes by the tax deadline, you normally will face a failure-to-pay penalty of one-half of one percent (.005) of your unpaid taxes. That penalty applies for each month or part of a month after the due date and starts accruing the day after the tax-filing due date.

5. If you requested the six-month filing extension in a timely fashion AND paid at least 90 percent of the taxes you owe with your request, you may not face a failure-to-pay penalty. However, you must pay any remaining balance by the extended due date.

6. If both the 5 percent failure-to-file penalty and the half-percent failure-to-pay penalties apply in any month, the maximum penalty that you’ll pay for both is 5 percent.

7. If you file your return more than 60 days after the due date or extended due date, the minimum penalty is the smaller of $135 or 100% of the unpaid tax.

8. You will not have to pay a late-filing or late-payment penalty if you can show reasonable cause for not filing or paying on time.

More information is available at  

Get The Actor’s Tax Guide at

Tuesday, April 7, 2015

Tips on deducting charitable contributuions

Tips on deducting charitable contributions

Donating to charity makes you feel good and can help lower your tax bill. Here are some tips to help ensure your contributions pay off on your tax return.

1. You must donate to a qualified charitable organization. You can’t deduct contributions you make to an individual, a political organization, or a political candidate.

2. You have to file Form 1040 and itemize your deductions on Schedule A. 

3. If you receive a benefit of some kind in return for your contribution, you can only deduct the amount that exceeds the fair market value of the benefit you received. Examples of benefits you may receive in return for your contribution include merchandise, tickets to an event, a dinner, or other goods and services.

4.  You can deduct your mileage (at 14 cents a mile) and other out-of-pocket expenses you incur in charitable activity.  

5. But you CANNOT deduct the value of your donated time. 

6. Donations of stock or other non-cash property are usually valued at their fair market value, which is the price you would get if you sold the item on the open market.  For household items and clothing (which must be in good condition to be deductible), think of what they would fetch at a garage sale.  If your total deduction for all non-cash contributions for the year is more than $500, you must also file Form 8283, Noncash Charitable Contributions, with your tax return.  Special rules apply to vehicle donations.

7. You must have a written record of your donation in order to deduct any cash gift, regardless of the amount. Cash contributions include those made by check or other monetary methods. That written record can be a written statement from the organization, a bank record or a payroll deduction record that substantiates your donation. That documentation should include the name of the organization, the date and amount of the contribution.

8. To claim a deduction for gifts of cash or property worth $250 or more, you must have a written statement from the qualified organization. The statement must show the amount of the cash or a description of any property given. It must also state whether the organization provided any goods or services in exchange for the gift.

9. If you donate one item or a group of similar items that are valued at more than $5,000, you must also complete Section B of Form 8283. This section generally requires an appraisal by a qualified appraiser.

Bonus tip:  Report only those contributions you actually made in 2014. If you pledged $100 to an organization in December, but didn’t actually pay until January, your deduction will be for 2015, not 2014. However, if you paid by credit card in December but didn’t actually pay your credit card bill until January, you can still deduct the $100 for 2014. Same goes for a check mailed in December that didn’t clear your bank until January: you can deduct it for 2014. 

For more information on charitable contributions, see Publication 526, Charitable Contributions, available at  For information about noncash contributions, see Publication 561, Determining the Value of Donated Property.

A CPA told me, “Your explanation of the charitable gifts [in The Actor’s Tax Guide] is probably the clearest, most concise explanation I have ever read.”  Get the book at

Tuesday, March 31, 2015

Best way to pay your taxes due: electronic bank draft

Best way to pay your taxes due:  electronic bank draft

If the bottom line on your tax return is bad news and you owe a balance due, the question is, what’s the best way to pay? 

There are three ways to pay:  You can mail a check, payable to “United States Treasury” (not “IRS”) and enclose the little voucher, Form 1040-V, which isn’t legally required but will help them process your payment.  You can also pay by credit card, which isn’t a good idea, because there’s a 2.5% “convenience” fee.  The best way to pay your balance is by electronic debit, which you can schedule for precisely on April 15. You can hang onto the money until the last minute (or give yourself time to make deposits).  There’s no paper check to get lost and no credit card fee, and the responsibility for timely payment is the bank’s, not yours.

If you can pay in full, bite the bullet and do so.  If you can’t pay the whole amount, pay as much as you can by the due date. The IRS will bill you for the balance and charge interest. You can also set up periodic payments.  You can apply for an online payment agreement or you can set up a payment plan using IRS Forms 9465 and 344-F.  Here’s the link for information:

If you’re in a real hardship position, they’ve shown some flexibility in the past few years, since so many folks have been in a similar situation. The important thing is to contact your local IRS office right away and discuss your situation with them.

Under certain circumstances, if you owe a significant amount, you’ll have to pay a penalty. (It’s Line 79 of the Form 1040.) Even the IRS admits that it’s a bear to figure this out, so pay the balance due and they’ll bill you. If you file your return on time, you won’t owe any additional late penalty.

Finally, if you do have a huge balance due (or conversely, a really outlandish refund coming), you may need to adjust your withholding with your employer(s) and/or change your quarterly payments for your self-employment work.  The Treasury Department has an Electronic Federal Tax Payment System which makes it easy to set up your quarterly payments. You can also have your payments automatically debited from your bank account. Here’s the link:  To adjust your withholding, file a new form W-4 with your employer(s) and decrease your exemptions and/or request additional funds to be withheld from your paychecks.    

Further discussion about these matters is in Chapter 14 of The Actors Tax Guide, available at

Monday, March 23, 2015

Business Gifts & Entertainment: Use Limits to Your Advantage

Business Gifts & Entertainment: Use Limits to Your Advantage

If you sent gifts of any kind to your clients, agents, casting directors, etc., including holiday greetings, birthday cards, and so forth, you can deduct them as business expenses. There’s a limit of $25.00 per person (not including shipping) per year, so if you sent your agent a $50.00 basket of flowers, you can’t write off the whole thing. However, if you sent the flowers to the agency (several non-related people as co-recipients and one person would not personally benefit from the gift), the individual limit wouldn't apply. If you sent out inexpensive items that were of an obviously promotional nature, such as mugs or pens with your name on them, those aren’t gifts, they’re advertising, and not subject to the gift rules.  Gratuities, such as a tip to your dresser at the close of show, aren’t gifts; they’re payment for services rendered. 

Business entertainment refers to anytime you host a client or potential client, your agent, a casting director, or anyone else who might advance your career, provided that it’s not “lavish or extravagant under the circumstances” (the IRS’s words). It can include things like theatre tickets or taking someone to dinner. And as I posted a couple of weeks ago, a dinner must have a clear, specific business purpose at the time of the event and can't be essentially social in nature. If you treat someone to dinner, you can deduct your own meal (food, drink, tax & tip) as well as your guest’s, and you must have been present at the meal for it to be deductible as entertainment – you can’t discuss business if you aren’t there!

The limit on business entertainment is 50% instead of a dollar amount, so you can use the limits to your advantage. Let's say you bought a ticket for a director to see you in a show. If the ticket was $30, call it a gift and deduct $25. If it was $60, call it entertainment and deduct $30.00.

Chapter Nine of The Actor’s Tax Guide is devoted to travel, transportation, entertainment, and vehicle expenses.  Get it at