It's tax time. I'll pause for the collective groan.
Hey, least we're making enough money to worry about. Amiright?
For some reason, it's really hard for voice actors to find detailed information about what exactly they should be keeping track of for tax time, so I thought I'd make a list for you as I was going about my taxes. This info could be applied to many small businesses, really, so be sure to share this link with anyone you think it might help.
If you're only making a couple hundred or a couple of thousand dollars a year as a voice actor, go ahead and report the money you make as miscellaneous income on your taxes. No need to make it more complicated than you need to -- you won't owe much on that kind of income. But if you're making more than five thousand or so? Congrats! You're making enough that you can start to take advantage of some tax breaks.
To take advantage of tax breaks, though, you must officially become a small business. It's easy and inexpensive to become a small business. You simply apply for a small business license with your state. Unless you're paying people salaries (which most of us voice actors aren't) you file with your state to become a sole proprietor. This is the easiest business designation to navigate.
After becoming a business/sole proprietor, you must open a business account with your local bank. When you are a business, you can't mix personal and business money in one account. Trust me, this is a big no-no. Again, very easy to do. Simply walk into your bank and say you want to open a business account. Every penny you make from voice work must go into that account first and then you can transfer it into your personal account to pay yourself whenever you want.
The last important step to becoming a business is to sign up with the IRS online to pay your estimated federal taxes. Every three months (look for dates online) you will need to go online and pay your 1040/estimated taxes online. This is easy, too. Don't let the official nature of it scare you. Here's an easy way to go about it :
How much did you make in the last three months?
What's twenty percent of that?
Go online and pay that much on the due date.
Okay, now that all the "official" stuff to become a business is out of the way. What can you write off? Here's the list I use below:
Know your Total Income:
Go to your business account and select "see all deposits" for the year. Print it off. That's how much you made for the year.
Write off your Operating Expenses-
This could be FB ads, flyers you printed, booths, trade shows, contests, costs for pay-to-play sites to advertise your services, website costs, business cards, anything you spent money on to get the word out about you and your services.
Any money you spent for others to do work for you.
This can be your business bank account monthly service fee. Try to find a free business account. Mine charges me ten bucks a month, unfortunately, so I do write it off.
Legal Advice/Tax Prep:
This is equipment: computer, printer, etc.
This is stuff like paper and toner and printer ink.
Taxes and Licenses:
Your fee for your business license and your business property tax go here.
Travel is broken down into categories
Travel (gas, plane tix, boat, camel, donkey, etc):
Whatever the size of your office (as long as it's used SOLELY as your office), you can write off heat and cooling for that room. My office is 19% of our home's sq footage, so I write off 19% of what we spent in heating/cooling/electricity for the year.
Other Business Deductions:
50% of your cell bill
50% of your Internet/phone/cable bill
% of your mortgage interest, real estate taxes,home insurance (percentage of home used solely as office)
What you'll need to know for your Payments and Estimates Section
Here's where you'll tell the government what you paid every three months online to the IRS for your estimated taxes during the year.
Then you have all your basic write-offs that you're used to:
Charity: (goods, cash, or services)
Miles driven to doctors and to get prescriptions
Med labs and procedures
Med co pays
Car Taxes for all your vehicles
Real Estate Taxes
College Account Contributions
You might have seen me mention "Business Property Tax". You don't pay that or get a form to fill out for it until you've completed your first year in business. It's a VERY small fee.
That's about it! I like to put 20% aside every single time I'm paid, so I have it to pay my estimated taxes online every quarter. Other than that, I label envelopes at the start of the year and just stick receipts in their corresponding write-off envelope as I get them. It's easy to add everything up at the end of the year that way.
If you want to go with a tax preparer the first year to get your feet wet, go ahead. You'll still need all this info and these envelopes for them. They'll just input the information for you, but they'll still need all of these receipts.
I hope this helps!
Just to be open and honest, I am not a tax professional. I did, however, shell out a good few grand my first few years in business to find out this pretty standard information. I hope that by sharing it with you in this way that it might save you some of that headache and expense. If any of you know of any other tax write-offs or see anything I maybe didn't communicate clearly in this post, please let me/others know in the comments section below. There's always more to learn!