Congratulations! You have an agent. Now what?
Well, you'll get access to job opportunities that you never knew existed. You can get BOOKED for gigs that background actors may not have access to at this time.
Your agent will work on your behalf to make sure you get the best gigs at the best rate. Sounds good, right? They understand how the industry works, who the major players are, and how you can move your career forward.
Then you really start to appreciate what your agent has done when you receive your big chunky check in the mail.
Now either you will receive your check directly from the Production Company (Payroll service) or the agent will give you your check.
But remember, you have to give your agent a piece of your cherry pie. You usually give your agent 1/10 of your dessert. Sometimes it's more if your agency is involved in career development. This piece you're giving your agent is called the agent commission. It's what you give the agent for helping you land your acting gig.
Don't get mad that you have to give away some cash. After all, it's only right when someone works hard on your behalf.
Here's some better news: everyone has a reason to celebrate the agent commission.
It's tax deductible!
Woohoo! Time to party like it's the Martini shot of the day.
Ok, so what does this really mean that commissions are tax deductible?
It means you can deduct this expense from your taxable income. Your taxable income is lower. When your taxable income is lowered, you pay less money in taxes.
Say what? Is this a deal or what?
Well, it is if you know what you are doing. Here's what you should keep track of to maximize your deductions and lower your taxes.
1. Keep a List of Acting Gigs that You Book
Record acting gig, date, and payment received in a safe place. If you can keep your pay stubs, that's great. You can always scan copies instead of having a big stack of papers sitting around in the middle of your exclusive actor's room located in your luxurious home.
2. Track all Commission PAYMENTS you Sent to your Agent
What's your total commission for the year? How much did you make for your agent? It's important to track the commissions you sent to your agent. A simple way to track commissions is by using good old Microsoft Excel. Need help? I give basic excel consultations and training to ensure you can keep records in the most efficient way. Just email me at email@example.com.
3. Perform Like An Actor, Operate Like a Business
As an actor, you are a business. You have to start acting like one if you want to reap the benefits of a business. Check your commission numbers against what your agent has included in their records. Make sure you have a good record of your commissions available on demand just in case you were audited.
4. Search for Deductions Beyond Agent Commissions
You can deduct workshops and seminars, travel expenses, union dues, head shots and more. In order to be deductible, the IRS states that your expense needs to be both "ordinary and necessary".
5. Create a Separate Account for Taxes That Were Not Withheld
If taxes are not taken out for all of your projects, do yourself a favor and take a percentage out for your taxes. Set your money aside in a separate account if that helps. You don't want a high tax bill and not have any money to pay it at the end of the year. That makes the IRS mad.
So how much taxes do you owe? Well, it depends on your expected taxable income for the year. Here is a list of tax rates for each income tax bracket.
If this all sounds too intimidating to think about while you are trying to prepare for your next audition, give me a call or email and I'll break it down in simplest terms.
Contact me at firstname.lastname@example.org.
You can also join me for the next wealth webinar to learn how you can make extra cash while you live your dreams.