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We are the Experts in Tax Services for the Entertainment Industry

Have a question? Ask David

March 9, 2013

Identity Theft - Not Just a Hollywood Movie!




To schedule an appointment, contact us today at: 818.557.3355

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March 31, 2012

Problems with Early Distribution of Retirement Funds




To schedule an appointment, contact us today at: 818.557.3355

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March 24, 2012

The Truth About Medical and Dental Deductions




To schedule an appointment, contact us today at: 818.557.3355

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March 2, 2012

A Message to All Parents about the Child Tax Credit!




To schedule an appointment, contact us today at: 818.557.3355

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February 10, 2012

THE QUICKEST AND SAFEST WAY TO YOUR TAX REFUND!




To schedule an appointment, contact us today at: 818.557.3355

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February 5, 2012

BE A STATUS-SEEKER ON YOUR TAX RETURN—
YOUR FILING STATUS CAN HELP IF CORRECT AND HURT IF WRONG.

Filing status is a very basic step in filing your tax return, but can affect your tax obligation tremendously. There are five (5) filing statuses:

Single
Married Filing Jointly
Married Filing Separately
Head of Household (HOH)
Qualifying Widow(er) with Dependent Child

Filing Status is used to determine your filing requirements, your standard deduction, eligibility for a number of credits, and your correct tax. Some people qualify for more than one status—be sure to pick the one that's best:

Your marital status on 12/31 determines your marital status for the entire tax year.

Single filing status most generally applies to anyone who is unmarried, divorced or legally separated according to state law.

Under most (but not all) circumstances, a married couple is advised to file Married Filing Jointly, even if only one spouse had income. Married Filing Separately is available, but that status permits few credits and is generally more disadvantageous. (Here at ActorsTaxPrep, we can, at no cost to you, run a pro forma comparative return to determine which is preferable.)

Head of Household (HOH) can be tricky. Usually, an HOH filer is unmarried, and must have paid more than half the cost of maintaining a home for the filer and a qualified dependent. A married person who did not live with his/her spouse for the last six months of the tax year, and who meets the other requirements, can also qualify as HOH.

You can get a great deal of additional information about filing status from IRS Publication 501, easily available at: irs.gov Or—if you are or become an ATP client—you have only to ask.


To schedule an appointment, contact us today at: 818.557.3355

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January 24, 2012

TAX TIPS FOR PARENTS OF CHILD ACTORS—OR OF CHILDREN IN GENERAL

Typically, parents are constantly paying out endless sums of money to support and provide benefits for their kids. There are a few benefits in the federal tax code to help offset some of that financial burden—so don't miss out on what we list below:

Dependent Exemption: In most cases, you can claim a child as a dependent starting with the year they are born. And continuing till they reach age 19 (at year's end) or age 24 at year's end if a full-time student, or they are permanently and totally disabled. Claiming an exemption means that $3,700 of the parent's income is exempt from taxation. For more info, see irs.gov and go to IRS Publication 501.

Child Tax Credit: You may be able to take this credit for any child under age 17. For more info, see irs.gov, Publication 972

Child and Dependent Care Credit: You may be able to claim this credit if you pay someone to care for your child or children under age 13, so that you can work, or look for work. See IRS Pub 503.

There are some serious benefits here, so we're not just "kidding around."


To schedule an appointment, contact us today at: 818.557.3355

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January 23, 2012

TAX MILEAGE RATES FOR 2011 AND 2012

This year, when you report your business mileage as a deduction, you will need to separate the mileage driven between 01 January 2011 and 30 June 2011. The reason is, for the first six months of the year, the mileage for business rate allows a deduction of $0.51 cents a mile, and for the six months after 20 June, it rises to $0.555 per mile.

The same separation will be needed for Medical Miles for the same reason:
MEDICAL MILEAGE RATES FOR 01 JAN TO 30 JUNE 2011: $0.19
MEDICAL MILEAGE RATES FOR 01 JULY TO 30 DEC 2011: $0.235


Charity mileage rate did not change:
CHARITY MILEAGE RATES FOR 01 JAN TO 31 DEC 2011: $0.14

The rates for informational purposes for 2012 are currently scheduled to remain the same all year, and they are:
BUSINESS RATE: $0.555
MEDICAL RATE: $0.23
CHARITY: $0.14


Of course, if you work with ActorsTaxPrep, you have no need to figure your dollar deductions. You just give us mileage figures for the first half and the second half of 2011, and we'll do the rest.

Remember, if you maintain a mileage log, you will both comply with tax law and have accurate mileage records that will benefit your deductions. And you need two odometer readings for 2011: as of 01 Jan 2011 and as of 31 Dec 2011. Note your starting mileage for 2012 now, if you have not already done so and check it again on New Year's Eve BEFORE you head out to celebrate.

Mileage is a truly beneficial deduction, so stay within the tax guidelines to take full advantage of the program and to avoid IRS conflicts later.


To schedule an appointment, contact us today at: 818.557.3355

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January 13, 2012

DID YOU PAY ANY NON-EMPLOYEES $600 OR MORE IN 2010??
YOU NEED TO SEND THEM A FORM 1099 MISC

Federal law requires the issuance of a Form 1099-Misc whenever you pay an individual $600 or more in a tax year, as a non-employee. The 1099-Misc must, by law, be sent to the recipients no later than 31 January 2012.

If you are not aware, ActorsTaxPrep can handle this for you—preparing the Forms themselves, mailing them to the designated recipients, and also preparing and mailing the master form (Form 1096) to the federal government. Our charges are very modest: a Set-Up fee of $25, then $10 per Form 1099, and if you want us to mail them to each payee, $1 per mailing.

To accomplish the above, we need:
Payee's name, address, zip
Payee's Social Security Number
Amount paid.

All that information should be available from Form W-9 that hopefully you had your payee complete, but if not, the data listed above is still required. (For future reference, it's always easier to get the payee data BEFORE you start paying them then after.)

Want help from us? We're ready, willing and able, but we do need the data listed ASAP.


To schedule an appointment, contact us today at: 818.557.3355

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January 5, 2012

TUESDAY, JANUARY 17, 2012 — FINAL DEADLINE TO PAY ESTIMATED 2010 PERSONAL INCOME TAXES IN A TIMELY MANNER

Anyone who, for whatever reason, needs to make a payment for personal income taxes for 2010, has until Tuesday 17 January 2012 to postmark that payment—in order to meet the timeliness standards of the IRS. (Normally, the deadline is 15 Jan. However, this year, the 15th falls on a Sunday, and Monday 16 Jan is MLK's Birthday, a federal holiday.) Taxpayers who are affected by this are usually those with extensive non-employee income (sometimes call 1099 income), or any taxpayer who, for whatever reason thinks he may owe the IRS.

Remember, please, that if you owe the IRS more than $1,000, even if you file by 15 April, you will be charged late payment penalty fees. The same deadline applies to state tax balances due.

Federal payments should be made to US Treasury. Be sure to include your social security number, and put "2011 Estimated taxes" on the check. If you're an ATP client, we'll gladly provide you with a voucher to include with your payment.



To schedule an appointment, contact us today at: 818.557.3355

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November 20, 2011

IF YOU ISSUE 1099-MISC FORMS AS A CA CORP OR INDIVIDUAL—PLEASE MAKE IT A POINT TO READ THE FOLLOWING:

On January 1st 2012, California law SB 459 goes into effect—and it has significant new impact on the employee vs. independent contractor situation. Many payors prefer to pay for services rendered as non-employee income. After all, by doing so you don't have the hassle of withholding income taxes, social security and Medicare taxes, etc. and you don't have to file any of the payroll tax forms required. It saves money and it saves paperwork. But while CA and the IRS have always been sensitive to this issue, and there have always been risks and downsides to misclassifying, the new law has much bigger teeth, and those big teeth bite hard. Each and every violation can subject an employer to fines of $5,000 to $25,000, plus back taxes and other liabilities.

In addition to the fines, employers who have engaged in willful misclassification will have to post on their website for a year a notice that they have committed a serious violation of the law, that they have changed their business practices to avoid future violations, and that any employee who believes himself to have been misclassified may contact the Labor and Workforce Development Agency.

So it is definitely time to ensure that you meet the legal criteria to classify workers as independent contractors—the risks of misclassifying now totally outweigh any savings.

You can google CA SB459 to see the new law in its entirety. There is an attached bulletin courtesy of Vantaggio HR Inc., which compares the factors used by six government agencies to determine if a worker is an independent contractor or an employee.

Bulletin on CA Law SB459



To schedule an appointment, contact us today at: 818.557.3355

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September 18, 2011

ACT NOW! THE EXTENSION DEADLINE IS FAST APPROACHING!

Time does truly fly. Back in April, we filed six-month extensions for personal income tax returns and the final deadline for that extension, October 15th, is racing towards us. Do yourself a huge favor and act now, rather than waiting for the chaotic last few days, when the press of business causes hurried entries and the potential for mistakes and delays is high.

And, if you're getting a refund, you're lending money with absolutely no return to your Uncle Sam and the state tax authorities. Conversely, if you owe money, your Uncle and his state counterparts are busily adding late payment penalties and interest to your balance. That's because the extension provides permission to file the paperwork late, but the money was due back on April 15th.

So get your tax ducks in a row, gather up your income statements and deductions, and schedule an appointment or send in your stuff. Call or email if you have any questions.


To schedule an appointment, contact us today at: 818.557.3355

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July 14, 2011

WHEN CAN I DEDUCT MEALS I EAT ON MY OWN?

Often, taxpayers ask a question similar to this:

"I drove from my home in Pasadena all the way to an audition in Santa Monica. Took an hour. The audition was at noon, and I wasn't free till 1PM. I was starving, and an hour's drive away from my home, so I bought a sandwich in Santa Monica. That's surely deductible, right?"


Wrong.

I always hate to break the news, but the only time you are permitted to deduct the cost of a meal solely for yourself is when you are out of town and meet what the IRS calls the "sleep test". Which means you spent the night out of town because of your business trip.

No matter how far you drove, or what the time of day was, if you are in the geographic area of your home town (e.g. Greater Los Angeles and environs), a meal for yourself is not deductible. And even if you leave town (let's say you drive down to San Diego from LA for an audition, or go for an audition from Brooklyn to Fort Lee, NJ), if you return that same day your food is a personal expense. Hard to swallow? You bet, but unfortunately, it's the law.


To schedule an appointment, contact us today at: 818.557.3355

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May 13, 2011

GOT AN EXTENSION FROM THE IRS?
DON'T WAIT TO FILE

Under current tax law, when you have filed an extension which the IRS accepts, you have until October 15th of this year to complete your return. But bear in mind, the extension only provides permission to file the paperwork late. If you owe money on your 2010 return, it was due April 18th, 2011, with or without the extension. So it makes good sense to at least learn how much may be owed so you can plan on getting it paid. Remember, the IRS is charging a late-payment penalty and interest on the balance due. (Suppose you owe taxes and can't pay. There are numerous payment options available that we can help you implement. And we can help you through the process.)

Now, suppose the opposite is true—you're going to be due a refund when you file your finished return. Sure, no penalty and no problem from our IRS friends—because they get to keep your money longer. But do you really want to provide Uncle Sam with an interest-free loan until late fall? Wouldn't the money from your refund feel better in your own pocket that in your Uncle's?
We suggest that whether you owe taxes or the IRS owes you that it makes good economic sense to get your ducks all in a row and file—now.

To schedule an appointment, contact us today at: 818.557.3355

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April 10, 2011

NOT KID STUFF—IMPORTANT INFO FOR THE PARENTS OF CHILD ACTORS

The entire issue of properly completing tax returns for child actors is very complex, and I will in future blogs address several other factors. But today, I want to point out that one of the few tax breaks the U.S. Congress ever gave to performing artists can often assist a child actor.

The tax break I’m talking about is called: QUALIFIED PERFORMING ARTIST—often abbreviated to QPA. Because the income levels are antiquated, few adults can utilize this tax break, but kids who live with their parents often can. Here are the requirements:

• Total Adjusted Gross Income must be $16,000 or less.

• Taxpayer must have at least two W-2s from entertainment sources.

• At least 10% of your AGI must be spent on business expenses.

A taxpayer (actually of any age) who meets the above criteria gets a special concession. Everyone else must opt for either taking the Standard Deduction or itemizing their deductions. A QPA gets to DO BOTH. That combination reduces the QPA’s tax obligation dramatically.

Unfortunately, one dollar over $16,000 adjusted gross income disqualifies the taxpayer—but when it works, it’s a great tax advantage.



To schedule an appointment, contact us today at: 818.557.3355 or visit our site: www.ActorsTaxPrep.com

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March 15, 2011

ANOTHER ENTERTAINMENT TAX "MYTHTERY" BUSINESS GIFTS

It's so logical to think that any business gift we give to enhance our relationship with people who can, in turn, enhance our career is deductible.

Not so.

The IRS is not so bold as to tell you to whom you can give what, but there is a very sharp limit to what you can deduct:

$25 PER PERSON, PER YEAR
Anything above that, given to any one person, is disallowed. You need to , as always, keep a record and a receipt, and there must be as business reason for the gift. You have no limit to the number of people you can give gifts to, so long as the above restrictions are in place.

And do remember—just because things seem logical does not mean they comply with tax law. Sometimes, just the opposite is true.

To schedule an appointment, contact us today at: 818.557.3355 or visit our site: www.ActorsTaxPrep.com

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February 23, 2011

BEAT THE DEADLINE!
LA City Business Tax Exemption due February 28th

Just a quick word of warning to anyone who qualifies as a business in the city of Los Angeles– the deadline to request an exemption from that tax is this coming Monday, February 28th.

By municipal ordinance, any resident of Los Angeles who files Schedule C (Sole Proprietor, i.e. non-employee income) is, by statute , a business. And remember– many people who have a mailing address that doesn't include the words "Los Angeles" are actually residents of LA. For example, Studio City, Sherman Oaks, Hollywood are all part of LA (But West Hollywood is not.) Check a good map or the Thomas Guide or go on line to be sure, if there is any doubt at all. Unincorporated areas of the county are also exempt (e.g. Marina del Rey.)

If you are already registered with the Office of Finance, you can apply for the exemption online. If not, you have to go to one of their offices to register in person, and you can apply for the exemption then and there. The Hollywood office at 6501 Fountain Avenue seems to understand the entertainment industry best.

What exemptions are available?
The Creative Activity exemption–up to $300,000.
The Small Business exemption–up to $100,000

These earnings are calculated on your non-employee earnings. No W-2 earnings are taxable by LA. Note that the exemption is for 2011 NOT 2010. So if you think there is any chance you will earn non-employee income, and you have a mailing address in LA, you must act before February 28th to obtain the above exemptions. You can google LA City Department of Finance Business Tax for additional information. This tax is highly complex, with lots of ifs, ands and buts. My best advice is– don't take anything connected to the tax for granted.


To schedule an appointment, contact us today at: 818.557.3355 or visit our site: www.ActorsTaxPrep.com

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February 17, 2011

CAN I TAKE OFF MY CLOTHES?
(As Deductions on a Tax Return!!!)

Frequently, clients ask me if they can deduct the cost of clothing that they purchase, but even more frequently, actors tell me that they KNOW they can do this because "everyone thinks so." Too bad that the "everyone" does not include the IRS.

Sadly, this is one of the "Great Myths of Actordom." While much of the Internal Revenue Code is complex and contradictory, the section that deals with this issue is plain and simple. It states:"Any article of clothing suitable for street wear is a personal expense."

This means that an actress who buys a gray chalk-stripe business suit for an audition as a lawyer or banker--and who wouldn't be caught dead wearing such a suit socially in laid-back LA–is unfortunately out of luck when it comes to the deduction. Why? Because such a staid and proper business suit, while not the attire of a fashionista, is perfectly suitable for street wear.

So that being said, what articles would be eligible for deduction. Genuine costumes–a cop suit, a nurse's outfit, a starship captain's uniform, a dancer's tutu, a clown suit. Period pieces and historical outfits. A man's tuxedo or a woman's ball gown.

We strongly recommend taking a photo of any such garb if you don't retain the article. That way, if you ever get questioned by the IRS, you have photographic substantiation. One more exception to note for our film maker and/or producer clients. If you buy wardrobe to be worn in a production, than it is not personal clothing. Instead, it is a prop, and therefore deductible..

Any questions about what clothing is deductible, check with us. We'll get you a "suitable" answer fast


To schedule an appointment, contact us today at: 818.557.3355 or visit our site: www.ActorsTaxPrep.com

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February 3, 2011

SHOULD YOU INCORPORATE?
The Pros and Cons for Entertainment Pros

Hardly a week goes by without one of my clients telling me that "they've been advised by a friend" to incorporate. This is one of those classic cases in which you have to be absolutely certain that your advisor "knows whereof he speaks."

Incorporation is a HIGHLY complex subject-and highly individual and personal. Incorporating unnecessarily means you take on a lot of cost and a host of tax and financial obligations--and possible perils. Here are a few aspects of incorporation to consider-but remember, space limitations require a less-than-comprehensive look. To know your own situation for sure, discuss it with us, or a trusted attorney who understands the issues involved. (There are a host of companies out there promoting incorporation and how they can help you get incorporated-but they are usually more motivated by their own desire to grow their business than to provide you with genuinely helpful information.)

First-the benefits of incorporation must outweigh the costs of creating and maintaining a corporation. There are 3 principal benefits that arise for people in the entertainment business:

• Limits of Liability

The first-limits of liability-protect an individual shareholder from being wholly responsible for a corporation's debts. Your obligation is limited to your investment in the corporation. This can be important, but is usually not vital to performing artists. (Why? You usually don't get sued for giving a bad reading, even in our litigious society.) For a producer or a filmmaker, this becomes a major issue because of the possibilities of law suits from on-the-set injuries.

• Retirement

The retirement benefits of incorporating are often substantial, as many W-2 employees are sharply limited in the amount of tax-deferred income they can contribute to their own retirement. Corporations have much greater leeway and greater control over retirement funds. Looking at the long term, enhanced retirement benefits are a key factor. The unpredictable longevity of Social Security makes this a matter of paramount importance, especially to younger taxpayers.

• Tax Benefits

Tax benefits can be extensive-but many factors have to come together to make that happen. Usually, a corporate income of at least $100,000 is necessary to justify the many costs and requirements of incorporating-and there should be a reasonable expectation that a similar income will continue in that same range for future years.

The costs and requirements of forming and maintaining a corporation include the actual process of incorporating, state corporate taxes that are unavoidable (California, e.g. imposes a flat $800 minimum tax on virtually all corporations and LLCs.), much additional bookkeeping, filing quarterly payroll taxes, filing a corporate return in addition to a personal return. maintaining corporate records, losing eligibility for unemployment compensation, and more.

To sum up, never incorporate without a full analysis of the pros and cons and the advice of a professional who understands the issues. This is a classic case of "look before you leap."

To schedule an appointment, contact us today at: 818.557.3355 or visit our site: www.ActorsTaxPrep.com

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January 24, 2011

GREAT NEWS ON TAX RETURN ACCEPTANCE:
"IRS SAYS HAPPY VALENTINE'S DAY"

We've been notified by the Internal Revenue Service that their computer revamps will be completed in time to permit acceptance of all 2010 tax returns starting February 14th. That means that there will be minimal delays for taxpayers expecting a refund.

The best way to expedite your refund is to come see us as soon as you receive all your W-2s and other income statements. Then, on February 14th, we'll immediately submit your return electronically and you'll be among the first to receive a refund!

To schedule an appointment, contact us today at: 818.557.3355 or visit our site: www.ActorsTaxPrep.com

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January 16, 2011

IRS ANNOUNCES DELAY IN TAX RETURN ACCEPTANCE
(and how to minimize its effect on your refund)

Congress delayed almost to the end of December to pass what they call the Tax Relief Act of 2010, As a result, the IRS has had to impose massive makeovers on their software and tax forms to accommodate the many changes the new law dictated.

Importantly to you, the IRS has announced that because of the changes, it cannot accept tax returns--either by paper filing or electronic filing--until at least the middle of February, and perhaps as late as the end of February. The exact date has not been determined yet.

WHO IS AFFECTED BY THIS DELAY?
Anybody who files a Schedule A, which is the form used to itemize deductions. So, it affects almost everybody in the entertainment industry. Even if you don't file a Schedule A, you could be affected if you fall in these categories:

• Taxpayers who claim the Tuition and Fees Deduction (Form 8917)

• Educator Expense Deduction (for full-time teachers, claimed on Form 1040, Ln 23)

• Casualties and Theft Losses (claimed on Form 8859

HOW TO MINIMIZE THE EFFECT
Most of us in the entertainment industry get refunds; those who owe want to know where they stand—and both groups want to move as quickly as possible. Here's how to do just that:

DON'T WAIT TILL THE IRS ANNOUNCES THEY'RE READY TO ACCEPT!
Any professional tax software system will enable your preparer to enter the data as soon as it is available, without waiting for the acceptance announcement.

Then, the moment the IRS green-lights filing, we can e-file those already-completed returns.

ONCE THE ACCEPTANCE IS ANNOUNCED, EVERY ONE ELSE WILL SCHEDULE APPOINTMENTS AND THE ENTIRE PROCESS WILL BE DELAYED BY WEEKS.

So we strongly suggest you see us as soon as you have all your income statements and deduction records in hand. It will mean a speedier refund for those fortunate folks getting one. And those who owe will know where they stand--and have more time to deal with paying the balance before the 15 April payment deadline.

Some people have asked, will the IRS extend the 15 April deadline because of this? We don't know for sure, but the overwhelming consensus is NO.
So act early. And once the date of acceptance is announced, we'll pass the word on here.

For answers to all your tax questions or to schedule an appointment, contact us today at: 818.557.3355 or visit our site: www.ActorsTaxPrep.com

ADDITIONAL NOTE:
Our building is located directly behind the large, pink awnings of Milt & Edie's Dry Cleaners.