Most, if not all, professional actors, actresses, and television personalities incur certain expenses to maintain their appearances. These expenses may include but are not limited to, the cost of make-up, hair styling, and certain clothing purchases. Entertainment industry tax deductions are therefore important to understand because they can overlap with personal expenses.
Since this maintenance is often required due to the nature of an entertainer’s career, many believe that expenses of this nature are fully or partially tax-deductible. However, others believe that such expenses are inherently personal, not business-related, and thus not deductible. The following article will explore which of these expenses are tax deductible and which fall under personal expenses.
What the IRS says about deductions for entertainers
The IRS states that:
“Taxpayers in the entertainment industry sometimes may incur expenses to maintain an image. These expenses are frequently related to the individual’s appearance in the form of clothing, make-up, and physical fitness. Other expenses in this area include bodyguards and limousines. These are generally found to be personal expenses as the inherently personal nature of the expense and the personal benefit far outweigh any potential business benefit.
No deduction is allowed for wardrobe, general make-up, or hairstyles for auditions, job interviews, or “to maintain an image”.”
In other words, the IRS considers make-up, hair styling, and similar expenses that are incurred in attempts to secure a certain job (auditions and interviews) to be personal expenses.
However, note that the IRS does not categorically state that all make-up, hair-styling, and similar expenses are personal in nature – it says they are “generally found” to be personal expenses. So there may be instances in which your accountant may be able to deduct certain expenses – especially those that can be directly linked to an event offered by an entertainer, which make them business-related expenses.
Recordkeeping to aid your tax filing process
While it is possible for your accountant to deduct business-related expenses from an entertainer’s tax return, this would require accurate recordkeeping, that clearly shows deductible expenses tied to business needs.
Implementing accounting software to help you manage business expenses, categorize them correctly, and manage recordkeeping for tax-deductible expenses is an important step in filing your taxes accurately. Reliable accounting software, not only keeps the accounting side of your business running more smoothly, but also gives you a holistic view of the financial side of your entertainment business. Through customized data reports provided by your accounting software, you could also make business-saving decisions.
At Fusion, our CPAs can set up your accounting software and recordkeeping processes to help you optimize tax-deductible expenses. We help to ensure you are making timely and accurate submissions to the IRS to avoid tax penalties.
This blog article is not intended to be the rendering of legal, accounting, tax advice or other professional services. Articles are based on current or proposed tax rules at the time they are written and older posts are not updated for tax rule changes. We expressly disclaim all liability in regard to actions taken or not taken based on the contents of this blog as well as the use or interpretation of this information. Information provided on this website is not all-inclusive and such information should not be relied upon as being all-inclusive.