Hope this question is okay for this forum. I have some questions on doing my taxes and am having trouble finding the answer so I thought Id try here. I have had many expenses in the past year related to filmmaking/editing work: for instance plane tickets to SF and NY for film work, educational products like seminars and equipment purchases HOWEVER as of this moment I actually havent made any $$ on any of these gigs (my expenses were usually mostly paid). I have contracts on several films signed where I earn % of profits (eventually) and deal memos regarding % of box office I get for organizing/scheduling film tours (however the actual touring doesnt start for another month so I havent actually received any $$ yet). I do have one small check from a film shoot in Sri Lanka I did but thats it. I am wondering how/if I can declare said expenses on my taxes for this past year. In other words, if my main focus has been on editing/filmmaking (30-40 hours a week) and Ive had expenses out of pocket I paid BUT I was still working my day job (only 10-15 hours a week though) for 9 out of the 12 months last year what exactly is the deal? I am confident it was my transition year and that 2015 will DEFINITELY see income generated in filmmaking but in the meantime Id like to get any tax returns possible on what I spent last year on film/editing work. What kind of paperwork do I need to show to prove this? Are deal memos/contracts enough? What about the reciepts for things like flights/equipment- what form do I need to produce these in ect? Does still having my day job last year screw me (even though it was minimal time?) Anyone have any recommendations as to where to get my taxes done in my field? I am in NYC/LA. Does anyone do turbotax? H&RBlock? Or do you go to specialized tax guys for artists? I am completely lost but hoping I can declare and properly get some money back from 2014. Any help would be greatly appreciated…
Dino Harambasic: Find the best tax guy that knows your business, and maybe even knows you personally, otherwise a lot of of the stuff you actually can claim will fall through the cracks. Its worth it! You cant claim tickets if someone else paid for it I think, because they are claiming it since they put the money out.
Ryan Charlie Charles: Yes, where my expenses were paid for I am not trying to claim that, just where I personally shelled out money for projects- for instance I have been getting into producing so Im sorta my own boss in some instances and have faith that the projects will generate money but for now its all out of pocket.
Ariel Sara Benson: Short answer: you can absolutely write off your filmmaking expenses. Dino is right though, it is much to your benefit if you find an entertainment accountant. This is incredibly complicated stuff. I pay my industry specialized accountant $200 and Id be saving money at 5x that rate.
Ethan Henerey: Pay a personal accountant who has a lot of film industry clients a few hundred bucks to do it for you. It will be worth it. Every movie you watched or bought (tickets or DVDs), all kinds of other things become deductible when you start freelancing in this industry.
Dino Harambasic: It gets really complicated, specially in Europe. The VAT, or tax, on cultural-related expenses is 6% while other can be 25%. I hope that sentence made sense. lol Just try to always have a reasonable buffer and dont go all out on a drinking binge with your clients.. before the tax season ends.
Ryan Charlie Charles: Thanks, guys! And so it doesnt matter if you make an actual income so long as you are working? And in what form is best to keep receipts? Paper copies I would imagine are best but for plane tickets for instance is a PDF of the receipt acceptable as long as it has my name and last 4 credit card digits on it? Also, I was told it helps if you have one credit card you put all your business expenses on. Does it help if it is specifically a BUSINESS credit card?
Ryan Charlie Charles: Also I spoke to a finance friend of mine who is also in film freelancing and he said unless you have over $5-6k in expenses you are better off just taking the standard deduction anyhow Does this ring true for you guys? Lets say I have about 2K in expenses, wouldnt it be worth it to spend a few hundred to get those declared so I get it back? Or do taxes not really work like that? What is this standard deduction he speaks of? Thanks again for all the input, I know its a drag dealing with financials (especially for a newbie freelancer who knows NOTHING about taxes) but I really appreciate it as it is so important to sort this out for the future. Hopefully there are others here in the same boat that this thread is helping out too.
Dino Harambasic: These are all great questions, but I think youll be better off asking someone who really knows taxes. I just press buttons on the keyboard with an occasional mouse click.
David Grout: Remember that claiming 2K in expenses does not get you a 2K refund. If you are claiming 2K in expenses, it allows you to reduce the income on which you pay taxes by 2K. If your tax rate is, lets say, 20% – claiming 2K in expenses will reduce your taxes payable by $400. So whether or not its worth it to pay someone depends on how much the will end up saving you and how much they cost.
Ryan Charlie Charles: Ah. I think Ive seen the light now. So basically until I start spending MORE money on these expenses it really doesnt pay for me to shell out a few hundred bucks for someone to declare them as the money I would get back would be just about what I spent to get it? For 2015 I will certainly be saving EVERY possible applicable receipt for filmmaking with this in mind. Final question though, if I go the H&R block or TurboTax route (about $50 I think to get it done) would it be worth it to try and declare my filmmaking expenses regardless (as my savings could be about $250 if I spent $1,250 lets say in my bracket?) OR is it real difficult to make these sorts of expenses fly without the proper tax guy who knows the loopholes? Thanks again guys and good luck with tax season!
Scott Pelzel: Find an accountant that works with people in this business, with that said, you are entitled to deduct any expenses related to your work that was not covered by the job. Even if you havent received payment for the jobs, you can still make these deductions and you will show a loss for the year. Generally, if you are in the first two years of your freelance business, showing a loss wont raise any red flags, but if you continuously show a loss beyond two years, you may be audited. Keep track of all expenses, be organized and save every receipt. Ive known freelancers who were audited for tax years 3 to 4 years past already. A good accountant can help, but make sure they dont suggest dodgy things, otherwise, you will find yourself n a bigger mess.
Shawn Swetsky: I use Mary at www.tondentax.com and she knows how to do all of the deductions like this. She works with tons of people in the entertainment business. Its well worth using a tax person that actually knows how to do this instead of having you search the internet for the answers. They might have been a good tax person in doing more standard and normal tax returns but if they dont know how to do this then I wouldnt use them. I used to try to do taxes on my own on turbotax and then I would stop before paying and sending my info in. I would then go to my Tax lady Mary and have her do it and she would save/get me so much more money it was worth the $300 fee many times over. I now dont even bother trying on my own and just go to her. Good luck with yours.
Home – Tonden & Associates
Ethan Henerey: Charlie, you wont know whether you have $2K in expenses, or a lot more, unless you start using an accountant. If youre really serious and hopeful that youre going to start making a living doing this stuff, then the time to build a relationship with an accountant is NOW. People who do their own taxes miss out on a LOT of deductions that they just dont know about. A good accountant can give you all kinds of financial advice, and is a good door opener for you in terms of recommending other financial consultants. They also act as a professional buffer between you and the IRS. Like everything else, an accountant is an investment. Even if they dont get you more money back THIS year, you want to start a relationship with them this year that will help their understanding of your whole financial picture next year. Finally – and this is important – their fee is a deductible expense itself.Edited to add: before I had children, I typically had many, many thousands of deductible business expenses. Hundreds of dollars in movies, hundreds of dollars in meals (networking and otherwise), hundreds of dollars in gifts to business colleagues. Your cell phone bill, your cable bill, your Netflix bill, your internet bill, any magazines or books you buy… the list goes on and on. Electronics. Im an editor but when I spent $1200 on a new DSLR a few years ago it was a deductible equipment expense. Our HDTV. You have no idea until youve consulted with someone who does this for hundreds of other clients and knows exactly what the government will allow.You dont have to have a paper trail for everything. Credit card and bank statements help. Your Amazon purchase history. There are lots of records these days. It doesnt matter if you havent been keeping receipts. Talk to an accountant! Theyll tell you what you need to do in 2015. And theyll make sure that your ducks are all in a row for 2014. Good luck,Final edit: Youre wrong to think it isnt worth doing until youre making more money and spending more on deductible expenses. In addition to the reasons already given, it looks better for you, should you ever be audited, to have started filing through a CPA as soon as your picture became complicated. Even if it doesnt net you anything, you can point to the records and say you got professional help as soon as your situation demanded it.
Ryan Charlie Charles: Sweet. Thanks so much everyone! Does anyone else other than Shawn have recommends in the LA area for such an accountant we are speaking of?
Ethan Henerey: I would start a new discussion with a very simple, bold question. i.e. LOOKING FOR AN ACCOUNTANT RECOMMENDATION
Ethan Henerey: You dont need someone based in LA (I still use my old NYC based firm) but theres also something to be said for meeting face to face. Youll benefit from the hand holding that you get in person.
Matt Silver: Ron Perez (310) 373-2622 Pereztax.com
Ron Perez | PerezTax
Jeff Bartsch: Many good things said here which I wont repeat. Though just to reiterate – HIRE A PROFESSIONAL.Doing your own taxes or going to H&R Block is like looking for paid editing gigs on Craigslist. Both are BAD.
Jeff Bartsch: As a point of reference, Charlie Charles – Ty Cobb isnt directing anything personal at you. If it feels like a personal attack, just know that its not you and keep asking questions. Tys the self-acknowledged cynic here.
Jeff Bartsch: Youre asking some very good ones by the way, Charlie.
Ryan Charlie Charles: Ty, youre not wrong (necessarily). Just a total downer. I find your glib perspective not helpful at all, but thanks anyways. If I still felt inclined to learn all my lessons by making mistakes I wouldnt have posted my question on what has always been a helpful forum with patient and informative people (you notwithstanding). In fact my goal in posting here was indeed to avoid making needless mistakes, something any mildly smart person would do. And in case you havent realized it the Internet sort of is the new library where one can go for information. But thanks for assuming Im lazy without ever meeting me. And to say the advice here is useless and then assume I wont use it anyway (because of course Im an idiot) has no logic at all. Our perspectives on this business are indeed quite different- mine is one of new and exciting opportunities where one should always ask questions and seek collaboration and guidance from fellow artists- so perhaps you dont need this forum even if some of us lessers do.
Jeff Bartsch: And this is where we stop, guys.
Monica Fischetti-Palmieri Williams: Dont go to HR block they screwed up my taxes last year Big time it took me 6 months to fix it .they are Bad not to say that they charged $ 500 !!!!!
Ryan Charlie Charles: Thanks for the heads up, Monica Fischetti-Palmieri Williams. And to go back to yesterdays convo for a moment I just for the first time saw the comments in the sticky RULES thread above and it made my day. If only I had been more thorough. Oh well, its probably because Im lazy and stupid. I kid. I kid. Thanks for the expert moderation, Jeff Bartsch!