The tax world could appear complicated to a freelance voice actor or actor. Optimizing your tax savings and properly completing your taxes can seem like a daunting chore, but it can be made simpler with a little knowledge and the right tools.
Understanding which expenses can be written off against your taxes is one of the first things to do. As a freelancer, you are effectively running your own business, and the costs associated with doing so can be written off from your taxable income. Examples of deductions that may be available to independent performers and voice actors include the following:
- Expenses for your home office: If you have a specific area in your home that is used only for voice-over or acting work, you may be eligible to deduct a percentage of your home expenses, such as rent, mortgage interest, utilities, and maintenance. Also, you can deduct costs for office supplies and furnishings that you need to set up and manage your home office.
- Business expenses: You are entitled to a tax deduction for any costs directly associated with your profession as a freelance actor or voice-over performer. This could involve paying to rent a studio, purchasing or leasing audio gear like microphones and soundproofing material, paying for software and subscriptions, maintaining a website and marketing costs, and paying for gas and car rentals when traveling.
- Expenses for professional development: Putting money into your own education and training can also be written off as a tax deduction. You can deduct professional development costs from your taxes, such as tuition for classes and workshops that will help you hone your acting or voice-over abilities.
- Self-employment taxes: If you work as a freelancer, you must pay the self-employment tax, which pays for Medicare and Social Security. Thankfully, this tax can be offset by a deduction from your taxable income for half of it.
It’s crucial to understand which expenses can be written off, but the math involved in doing so can be challenging. Online tools like the self-employment tax calculator and 1099 tax estimator can be quite beneficial in this situation.
You can use the 1099 tax estimator to determine how much tax you will pay based on your freelance income. For individuals who receive paid via 1099 forms, this is especially useful. Your income, spending, and deductions are taken into consideration by the estimator, which gives you a ballpark figure for your tax liability.
It’s crucial to compute your projected tax payments in addition to using the 1099 tax calculator. Instead of paying all at once during tax season, you can settle your tax debt over the course of the year by making estimated tax payments to the IRS. You may be able to avoid underpayment fines by doing this.
