Actors Await a Tax-Deduction Bill That Could Save Them Thousands
If you’re an actor employed by a theater company, you’re probably spending thousands of dollars a year on auditions, headshots, acting classes and agent fees. As of now, unlike your self-employed counterparts, you probably aren’t entitled to write those thousands off your taxable income.
But that might change soon.
Last April, U.S. Reps. Judy Chu (D-Calif.) and Vern Buchanan (R-Fla.) introduced a bill that would provide significant tax breaks for actors making up to $100,000 a year.
If passed, the bill would allow those actors to deduct such expenses as agent and manager fees, stage makeup, and workshops from their taxable income. It also would adjust the $100,000 ceiling for inflation.
“A lot of our money goes towards bettering ourselves … and we’re getting taxed on it,” said Jonathan Raviv, 42, a New York City-based theater actor.
Since 1986, actors have been entitled to deduct such expenses only if they made a gross income below $16,000. And even that break disappeared when the Trump administration’s tax bill passed in 2017.
“They’re trying to reinstate something we already had, and it will make a huge difference,” said Miriam Laube, based in New York City, who has been a professional theater actor for 30 years. “We do not make much as theater workers. If you owe $3,000 in taxes in April, there’s no way to get that [money]. We desperately need it.”
“I’ve seen jobs where the minimum pay was like $200 [a week] and I’m like wait, is this really something someone’s going to support themselves with?” said Chibueze Ihuoma, 24, a New York-based actor.
The benefits would serve as much-needed relief especially given the job losses amid the pandemic. Even after theaters reopened, most auditions shifted from in-person to recorded videos, or “self tapes.” While actors once may have needed to travel long distances for auditions, they now need costly equipment to record these tapes — expenses that can no longer be deducted.
“As an actor, my job is not to act. My job as an actor is to audition,” said Nikhil Saboo, 30, a Broadway actor who has been a professional since 2015. “Auditioning takes money. It takes headshots, it takes photo shoots, it takes lighting equipment, it takes a good iPhone to record yourself, and it takes your time.”
Actors do have a remedy. They can form a limited liability corporation (LLC) and write off costs against their income. “If I need to take headshots, if I need lighting equipment, if I need to take a dance class, that … can be deducted,” said Saboo, who has incorporated an LLC of his own.
But LLCs have downsides. The main one: If you’re out of work, you can’t claim unemployment compensation, which many actors rely on, given the uncertainty of the profession.
The standard deduction of $13,850 is available to all. But, for example, if you made $80,000 one year, your agent fees would amount to $8,000 and manager fees, to another $8,000. That’s $16,000 right there.
“Artists are several times more likely than U.S. workers in general to be self‐employed,” according to pre-pandemic data collected by the National Endowment for the Arts, which found that 37.8 percent of all actors were self-employed. Self-employed actors may also write off professional expenditures from their taxable income. And most actors do freelance, Laube said.
But that statement holds true only outside of Broadway. According to a fact sheet released by the Actors Equity Association, the union of theater actors, “most performing artists are employees, not contractors.”
Rep. Chu’s bill has bipartisan support, with 66 co-sponsors in the House.
The impact on government revenue would be minor — about $440 million a year, according to an analysis from the Joint Committee on Taxation, she says. This is a small fraction of what the entertainment industry generates — a trillion dollars a year.
“We have tremendous supporters in SAG-AFTRA,” Chu said in an interview. “They went from office to office to talk to members of Congress. I know for sure that they also met with [Senate Majority Leader] Chuck Schumer who was very open to making sure that once we get it out of the House, that they can get it through the Senate,” she said.
“We need to have a greater awareness of the millions of jobs that the creative industry is providing to this country,” said Chu. “Our film, television and entertainment industry can’t be duplicated anywhere else.”
