Are you an Employee or an Independent Contractor?

Many actors find themselves acting as an employee for some jobs and as an independent contractor for others. You should always be certain which it is because the tax treatment of each is very different. Employees only pay half the Social Security and Medicare taxes. Their employers pay the other half. Independent contractors (self-employed people) have to pay the entire Social Security and Medicare taxes themselves but are allowed a deduction from their income for a percentage of the Social Security and Medicare tax paid and are allowed to deduct the cost of their health insurance premiums regardless of whether they can itemize their deductions. Independent contractors may have to make quarterly tax payments if their income is high enough. Employees have their federal and state income tax and their share of their Social Security withheld from their wages and can only deduct their expenses if they can itemize their deductions.

Regardless of whether you work as an employee or a independent contractor, it is to your benefit to keep your own records of your income and expenses from acting. The means of deducting the expense is different but many of the deductions are the same.

Qualified Performing Artists

A "qualified performing artist" is an actor or other performing artist who: A) performed services in the performing arts as an employee for at least two different employers during the tax year, B) received wages of at least $200 each from at least two employers, C) has expenses attributable to the performing arts which add up to 10% or more of their gross wages from the performing arts, and D) had an adjusted gross income (Form 1040 Line 24) of $16,000 or less before deducting expenses as a performing artist. If the performing artist is married the couple must file a joint return. While factors A through C are figured separately for each spouse, factor D, the adjusted gross income requirement, must be calculated using the income from both spouses before the deductions.