DISCLAIMER: I am not a tax professional, just a helpful guide. Tax laws change from year to year. Nothing on this page is to be cited as a legal source. This is for helpful/informational purposes only and should not replace direct advice from a tax professional.
If you’re earning 1099 or cash income, particularly as an actor, there are some things you need to be aware of. I’ll tackle the most important ones below.
Remember that unless you’re filling out a W4 on set, you’re likely being paid as an independent contractor and earning income in cash or under a 1099.
Here’s What You Need To Know
1. PLAN TO PAY TAXES AT THE END OF THE YEAR
I know money can get tight in the middle of the year and it’s easy to get short-sighted when what you need is money today! But if you’re working as an independent contractor and not getting taxes taken out of your check, at some point, it will be time to pay the piper!
Plan on giving Uncle Sammy 30% of your paycheck, just to be safe. Put it in a separate account so it’s there at tax time. I know… it’s sad. But much sadder when you get blindsided by a huge tax bill in April.
2. CONSIDER MAKING QUARTERLY ESTIMATED TAX PAYMENTS
If you’re earning a lot in 1099 income… I’ll throw a number out as an example… say $30,000/year, I would make quarterly estimated tax payments to the Franchise Tax Board. You can ask your accountant how to do that.
Why would you do this? Because all that time your taxes WOULD be going to the government’s bank account and earning interest throughout the year is now earning interest in YOUR bank account. And you don’t think the big guys are gonna let that slide, do you? Nope, they’re gonna slap you with a penalty fee at tax time. (One year, mine was $950!)
So if you think you’ll fall into this category, give your tax person a call to see what you should do.
3. REGISTER FOR YOUR LA BUSINESS TAX
We talk about How to Register for LA Business Tax here. But the quick and dirty version is that, if you’re earning cash or 1099 income as a creative artist in Los Angeles, you need to file this form. It’s quick & easy (we walk you through it in the article linked above, and you’ll likely not owe anything. However, if you don’t do it… you can get slapped with a fine. So do that!
4. YOUR DEDUCTIONS COUNT WITH 1099 INCOME
Because of recent changes in the tax laws, our actor deductions are rendered almost useless. EXCEPT if you’re earning 1099 income. Your tax person may be able to write off your acting deductions so keep your receipts, just in case.
Need a slick way to track your residuals? Download your FREE Income Tracker with a video walkthrough on exactly how to use it!
WE’LL HELP YOU TRACK YOUR INCOME
If you want to make tax time a lot less stressful, check out our Happy Actors Income Tracker. Counting your money should be fun, not stressful.
Still Have Questions?
We’ve got our own friendly preparer, Jeff Thompson. Ask him your questions on the Happy Actors FB page or reach him by email at jeff@JeffThat.com.