The deduction for performers | Finance

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By: Lee Grayson

Tuxedos required for performance work are generally eligible for federal tax deductions.

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The Internal Revenue Service allows performers to deduct the costs of equipment required for the job. For example, materials for creating magical illusions or the cost of purchasing copyrighted magical effects may be eligible if the conjurer meets IRS qualifications as a professional and the materials used meet to IRS tests. Some states, including Massachusetts, also allow performers who meet federal requirements to deduct federal taxes on state forms.

Artist deductions

The terms “ordinary” and “necessary” are used by the IRS to describe the trading tools that can be inferred. The definitions apply to anyone working in a business, including artists doing performance work. The agency divides performing artists into professionals and amateurs. He categorizes professionals as those who run a business in a professional manner and spend time growing the business in order to make a profit. The IRS seeks to see that an artist depends on the performance company’s profits for a living. Artists, under IRS rules, must also have the training or education to function as a professional.

Deposit

Self-employed artists file Schedule C, Business Profit or Loss, or Short Form C-EZ, Business Net Profit, as an attachment to IRS Tax Form 1040 to claim federal deductions. Artists with a personal practice studio or space used exclusively for storage of performance gear or equipment have the option to complete IRS Form 8829 to claim a deduction for a home office – in this case, a studio or a storage area.

Allowable deductions

Deductions for performances, according to IRS regulations, are only allowable when an artist uses the elements exclusively for performances. A clown nose is eligible, but a black costume required for an orchestral musician is not. Few non-professional events outside of work allow a clown to wear a rubber nose, but musicians can wear a costume for personal occasions. Qualified tools for musicians, for example, include an instrument and the accessories needed to use the instrument, such as a protective case for a trumpet. The IRS requires artists to depreciate equipment that has a useful life of more than a year. This means that an artist can only depreciate a portion of the purchase price each year over several years using IRS form 4562. The tax code lists the years of the useful life allowed for depreciation. equipment.

Profits and losses

The IRS also examines an artist’s tax returns to track annual performance profits. The IRS allows losses during a start-up period, losses due to write-offs, and a few years of losses due to things beyond the performers’ control, such as time away from the show due to a sickness. Any deduction must show that the artist is not simply an amateur using the deduction for personal gain. An artist must earn a profit in three of the last five consecutive years of commercial operation to be eligible for federal performance deductions.

Deduction limits

Performance artists receiving a salary from an employer can deduct expenses in the miscellaneous category using Form 1040, Schedule A. This form allows an artist to deduct expenses greater than 2% of the artist’s adjusted gross income. , or total income less deductions. Performance artists operating as a business do not have general limits for deductions, but must follow the limits and qualifications listed for various deductions on the Federal Profit and Loss Form – Schedule C or C-EZ.


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