Taxes are the worst! But Gabby sheds some light on expenses for those of us in the entertainment industry. And some of them could give us a bigger break come April! This is the second video Gabby's made about taxes so be sure to give the first one a view too. Original Tax Video
Expenses Every VO Actor Should be Writing Off – 5:05
Hey everybody, it’s Gabby. Thanks for joining me again. Going to talk to you this month about taxes. So if you’re like most of us, you’re probably right in the thick of tax season, and this is a follow-up to a previous video that I did last year about taxes and expense categories for sole proprietors and voice actors. So I want to expand a little bit upon that. I’ve had a lot of folks ask me a lot of questions about taxes over the years, and for the most part what I’ve come to find is that a lot of folks are just really unfamiliar with what they can and can't expense. They know that they can do it but are still unsure. A lot of folks when they’re just starting out aren't quite ready for an accountant. Their taxes aren't that complicated yet. There’s obviously a lot of DIY ways to do taxes nowadays. And so you can take advantage of all of that, but you’ve got to know what you’re able to expense and what exactly you’re saving receipts for. So I want to go over some of those categories.
First thing to know, the IRS functions by a simple rule when it comes to expenses. Anything that you want to expense has to be ordinary and necessary for conducting your business. Remember that. That is your mantra. Ordinary and necessary. Because if it’s not ordinary and necessary, you can't expense it, or it’s a potential audit trigger. So it’s a big no-no. In a typical working year, voice actors can expense all of the following.
Education and training. Anything that is related to educating yourself, coaching, training, improving your career, workshops, travel related to workshops, events that you attend are all very expensable. Your office expenses. These include your utilities, maintenance and repair of your office, your office equipment, your phones, office supplies. This is postage, printing, software, studio equipment and gear, hardware, professional services like an accountant, bank fees, legal fees. Even gifts for your clients come the holidays are expensable. However they’re capped at $25, so just keep that in mind. You can't send somebody some really extravagant gift basket that cost you $500 because you’re only gonna be able to expense $25 of it. So just know that.
Utilities, gas, cable, electric, water, all of those things if you work from home, like most voice actors, the things that are related to the running of your home office are expensable as a percentage. It’s based on the square footage of your office in relation to the square footage of your entire home. So let's say your office takes up 20%. If your office is 20% of your home, then 20% of the utilities and of maintenance of your house can be expensed as part of your business. So pretty important stuff.
Reference materials, research, obviously any kind of dues or membership, pay-to-play website, all 100% expensable. Here's the fun stuff too. These are oddball things that voice actors and other actors get away with because we’re part of the entertainment industry. Let's say you really, really want to be a video game voice actor. That’s kind of your goal, your thing, well, there’s a category in your taxes about research and development. You can buy tons of video games and expense them, even your video game system, because you are doing critical research for your industry and for your career. So that's pretty fun. Likewise movie tickets, certain books and other educational material, sometimes even music because we do some post-production occasionally, so sound effects, things of that nature. All of those things are completely expensable. Anytime you have a meeting with a fellow voice actor, or a colleague, or a potential client, whether it be for coffee or a meal, if you pay for it or you just pay your portion, that is also expensable.
Now again, there are always rules, there are always exceptions. Please keep in mind I am not a CPA. I do not profess to be. Tax laws and tax rules change every single year, so it’s important that you have professionals that you can rely on and people to consult with. However there are also great do-it-yourself services, Turbo Tax, Tax Act is one of my favorites. I love using that program. And remember save your receipts, be smart. When in doubt, don't expense it because it will probably bite you in the butt later, but you can always save the receipts just in case.
For more information on this topic, check out my previous video. I hope this helps. Hey guys, thanks for watching. If you want more advice from me, please go to my website, GabrielleNistico.com. Or you can subscribe for my monthly videos. And if you want to see some more, here's a couple to take a look at.
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