This is the fun part.
You know how you read about executives in John Grisham novels, casually making extravagant purchases and shrugging it off with the line, “don’t worry, it’s a business deduction.”
Presumably, the executive employs shady business practices because he possesses a wizard of an accountant, capable of moving debits and credits like Scouts across the Stratego board.
Turns out, you don’t need Itzhak Stern to get the deductions you deserve. What you need is:
- A kick ass spreadsheet
- A method to capture receipts
- A list of deductions
Optional: find an accountant to help you file — an option I’d recommend.
Now, can you take the extravagant deductions these executives brag about: a new entertainment center with the 4K flat screen and Bose surround sound? I wouldn’t recommend it — it has to be a legitimate business expense — but always consult with your tax professional.
Onto the list of deductions!
30 Tax Deductions for a Hollywood Freelancer
- Rent/Mortgage. Do you work out of your home or apartment? If so, a portion of your rent/mortgage can be deducted each month. Calculate what portion to take by measuring the square footage of your office space and dividing it by total square feet. (The IRS requires that your office space be allocated for work only.)
- Utilities (gas, electricity, and Internet). Calculated in the same manner as above.
- Cell phone. If more than half your cell phone use is for business, then you can deduct that proportion, up to the total bill.
- Insurance (car, renter’s, health). Car and renter’s insurance should be proportionate to how much they’re used for work. The entirety of your health insurance premium can be deducted if you pay it yourself.
- Office supplies. If it went on your back-to-school list, it counts.
- Shipping supplies (labels, postage, printer paper, toner)
- Business Cards
- Website domain name
- Web Hosting. If you pay for web hosting with Hostgator, Blue Host, or (hopefully not) GoDaddy, count that as a deduction.
- Web designs and templates.
- Web/phone apps (Dropbox, WeekendRead, Evernote)
- Email marketing software (Aweber, MailChimp, InfusionSoft).
- Cell phones
- Networking. Finally, a way your drinking habit saves you money! If it’s a business drinks or coffee, yes, count this as a deduction.
- Membership dues. If you’re affiliated with SAG, AFTRA, WGAw, JHRTS, CAPE, DGA, etc. all dues will count towards your deduction.
- VA Fees. If you’re using a virtual assistant, deduct their fee.
- Conference fees (SXSW, Sundance, Austin Film Festival)
- Meals. Yes, meals can be deducted but the rules are stringent. Typically, only 50% of a meal can be deducted, and it must be a business meal. For example, you’re taking a client out to dinner or lunch, yes you can deduct. If you’re running errands and stop at anIn ‘N Out, no, you can’t.
- Tax Preparation Services. If you hire a tax professional or use tax preparation software.
- Education (classes, books, magazines). If it’s pertinent to your career, you can deduct. Make sure you’re able to justify why it’s pertinent to your work, however.
- TV/cable, Netflix, Movies. All of this pertains to your education in Hollywood, right?
- Snacks. If it’s for the office or consumed during your work day, it counts as a deduction.
- Coffee Runs. Same as above.
- Mileage. Your commute to your office or place of work cannot be deducted. However, mileage for runs, for errands, and other business-related tasks do count. Track miles, not what you pay in gas (you’ll get 56 cents to the mile).
- Parking. If it’s not part of your commute, deduct it.
- Taxi/Uber Fares
In this series so far, we’ve covered what qualifies as a freelancer, and best practices and tools to help you with your tax preparation. Next time, I’ll cover the 7 tax mistakes to avoid.
Photo Credit: Scott Hudson