Working with a Pro
With tax season now in full swing, one of the main decisions you’ll need to make is whether to hire a professional tax preparer, or to do it yourself. I’ve heard from more than one colleague that actors really aren't interested in working with taxes and would just as soon give a hundred bucks (or more) to a professional preparer and be done with it. If that's your choice, fine. You’re a job creator in the tax preparation industry. But you still need to think about a couple of things.
First, if you choose to go with a pro, make sure he or she is competent and experienced. Ask around and find somebody with a good track record. And trust your gut. If you’re not personally comfortable with the person, walk away. After all, you’ll be sharing some pretty intimate details of your life with them. The IRS has a web page of “Ten Tips to Help You Choose a Tax Preparer.” It’s all pretty much common sense, but it’s worth a look. Note also that all paid tax preparers must now have a Preparer Tax Identification Number (PTIN). Here’s the link: www.irs.gov/uac/Ten-Tips-to-Help-You-Choose-a-Tax-Preparer
Also make sure your tax preparer knows about actors and how our business works. Many tax preparers are totally clueless about actors! I’ve read some horror stories about tax preparers who completely screwed up the Qualifying Performing Artist rules, reported deductions improperly, and made other significant errors on actors’ tax returns. Last year, I heard that a tax preparer who caters specifically to actors was deducting gym memberships and even Botox injections as professional expenses! That's nonsense, and could trigger an audit, which would not be good news for you.
The main thing to remember about using a pro: YOU are legally responsible for what's on your tax return, even if it was prepared by someone else!
OK, let’s say you’ve found a good tax professional. The second thing to remember is that even when you use a pro, you’ll still need to prepare! Accountants charge for the time they spend preparing your tax return, and if you bring in all your records neatly organized, their fee will be a lot lower than if you simply dump a shoebox full of receipts on their desk. And when you pull your documents together neatly, you can easily answer any questions the preparer might have.
My friend and tax maven Dean Vivian says that you should bring the following when you meet with a tax preparer: 1) Documentation for all your income – W-2s, 1099s, bank and dividend statements, unemployment statements, etc. 2) Documentation of all your expenses – student loan, medical, child care, charitable contributions, mortgage interest, taxes, etc., and all your professional expenses, preferably neatly organized. 3) If this is your first visit to the tax preparer, also bring a copy of last year’s return.
I’ll be posting tax tips here about once a week during the tax season. You can also find mini-tips at my Twitter site every day or so: https://twitter.com/ActorsTaxGuide.
Learn about actors’ unique tax issues in The Actor’s Tax Guide. The 2015 edition will be available soon.