Tax Tips For Actors& Other Performers

Are You a "QPA"?There are not many provisions in the 45,444 pages of the United States Internal Revenue Code which were designed to assist and benefit Performing Artists--but there is one, which is called Qualifying Performing Artist (QPA).It can be of terrific assistance to performing artists. Sadly, though, the qualifications are so restrictive that few can qualify.
WHO QUALIFIES AS A QUALIFYING PERFORMING ARTIST &WHY SHOULD YOU CARE?
First, let's see how it works; then we'll list qualifications.The IRS allows every taxpayer a Standard Deduction--an amount of income which can be deducted from total income without any strings attached. You need no receipts, no records, no reasons why with the Standard Deduction, which for tax year 2005, is $5,000.00 for most single taxpayers.And every taxpayer must make a choice: is it better to take the Standard Deduction, or to itemize? If you itemize, your deductions must exceed $5,000 to do you any good (but most actors easily exceed the Standard Deduction).The great thing about being a QPA is--you get to do both! Yes, you can both itemize your expenses and take the standard deduction. As a result, QPA's have extremely minimal taxes to pay, if any.Now let's look at the restrictions, which are very limiting.
(1) You must have an Adjusted Gross Income of $16,000 or less. Adjusted Gross Income is total income less allowable adjustments, but before deductions. It includes wages and salaries, interest and dividend income, unemployment, net income or loss from a Schedule C (independent contractor.) and other income as well. It is reduced by allowable Moving Expenses, student loan deduction, payment of alimony, and a few other items.If you are married and filing jointly, joint income must be below $16,000 to qualify. So the income restrictions eliminate most actors--but certainly not all.(2) You must have at least two entertainment-related jobs which each pay $200.00 or more.(3) Your expenses in performing arts must exceed 10% of income in that field (this one is never a problem).If you meet these qualifications, you report your deductible expenses on Form 2106, and the total of the deductions then goes on Line 24 of the 1040. The net result is you get to take those expenses AND your Standard Deduction of $5,000--and you'll very likely be sitting pretty taxwise.The income provisions of QPA have never been updated--if they were indexed for inflation, this could help many other actors, singers, dancers, etc.But if you qualify as a QPA--it will be a help to you!
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ABOUT DAVID ROGERSDavid Rogers, Managing Partner, of ActorsTaxPrep is a former senior advertising executive. He has been an actor since 1992, and is a long-time member of SAG, AFTRA and AEA. A graduate of Princeton University, he is registered with CTEC and is a member of the National Association of Tax Professionals and the National Society of Accountants. David lectures frequently on entertainment tax issues throughout the United States.ActorsTaxPrep is a tax preparation firm specializing in the entertainment business. Headquartered in Los Angeles, the company represents hundreds of clients who are spread over some twenty-seven states. In business since 1990, the company and all its preparers are fully bonded, insured, licensed and registered with the California Tax Education Council.Click here for more information on ActorsTaxPrep