Tax Deductions and Resources for Freelance Filmmakers
Taxes can be daunting for freelance filmmakers. Here are some tips for organizing your expenses and deductions this tax season.
Top image via Shutterstock.
Perhaps my least favorite part of being my own boss is the maddening process of doing my taxes each year. Some years, this process has been nothing short of overwhelming. But this year I set out to establish a better system to ease the pain of saying so long to some of my income.
While I would absolutely recommend an accountant or tax specialist if you have access to one, I also think that being organized and informed will help you get the (very literal) most for your money. Whether you’re taking to TurboTax, hiring an accountant, or going rogue, understanding your deductions and relying on some available apps should simply the process this tax season.
Below you’ll find an overview of possible deductions, a list of worthwhile apps, and some general tips.
Image via Shutterstock.
From the train you take to your shiny, new camera, here is a comprehensive list of expenses freelance filmmakers should keep track of (and file away throughout the year) — compiled from the Freelancers Union’s Tax Deductions Overview.
- Advertising: Website costs (hosting, domain name registration, website template), online or print advertisements, business cards, etc.
- Transportation: Whether it’s the train into the city, a flight abroad, or mileage to and from sets, keep track of it because you can deduct it.
- Contract labor: Anyone you have hired to help you with production falls into this category. So if it’s the designer you paid to design your website or the video editor you hired, save all of their invoices.
- Depreciation: This one is super helpful for freelance filmmakers. If you own your own videography equipment or even just have a computer, you can write off the depreciating value of that equipment for up to five years. So it is important to keep track of your equipment receipts on big purchases like cameras or laptops, even from previous years.
- Insurance: Any type of insurance you’ve paid into, other than health insurance. This includes property or travel insurance on your gear, liability insurance, etc.
- Interest: If you took out a loan to buy the latest RED camera, keep track of what you pay in interest because you can deduct your interest on the loan (and on credit cards).
- Legal and professional services: You can deduct the cost of lawyers or tax professionals, with a few restrictions.
- Office expenses: Anything from printer ink to storyboarding notepads is deductible.
- Business property: If you rent an office or another space for videography, you can write this off.
- Taxes and licenses: You can write off the following taxes you’ve already paid: 1) real estate on your business property (this includes your home office if you work from home), 2) Federal Unemployment tax and 3) state and local taxes (if you did not already collect them from the buyer).
- Travel: For any business-related travel expense, you can deduct transportation (as long as it does not overlap with the transportation deductions above), accommodations, meals, and other costs, like country entry fees, passport costs, etc.
- Meals and expenses: This one is a bit tedious but do your best to file every meal and business-related expense. Networking is the name of the game in film and videography, and I find I eat out more frequently than I realize as a networking strategy, so I write those expenses off accordingly. That means beers at the film screening or meals with a potential collaborator can go toward reducing your taxes.
- Utilities: If you have an office space, 100 percent of your utilities are deductible. If you have a home office, you can deduct a percentage of your electricity, gas, water, internet, and cell phone bills.
- Health insurance premiums: If you’re not on a health insurance plan through another employer or your spouse, you can deduct your monthly premiums.
- Educational expenses: If you took any sort of class related to your freelance film and videography work, you can deduct the cost. This includes weekend workshops and lectures.
- Self employment tax: This is the cost of paying into Medicare and Social Security (which employers would would normally cover).
- Others: Pension and profit-sharing plans; car rental or equipment leasing; supplies, wages, unpaid invoices, etc.
Tips and Apps for Organizing Deductible Receipts
Image via Shoeboxed.
Below is a list of apps that all offer some form of receipt organization and other tax or business benefits.
And for you old-school kids (like myself), you can also create a filing system to keep your receipts organized after you’ve digitized them. I’ve broken up my filing system into the following categories:
- Office Supplies
- Gear Expenses
- Gear Depreciation
- Freelancers Union: Healthy Tax Habits Checklist — As direct as its title, this is a great (and somewhat sobering) checklist to help guide you to a more organized tax year.
- Freelancers Union: Tax Resources for Freelancers — This includes several in-depth categories with information to help answer all your tax questions.
- IRS — Filing your Taxes — The final say on any issues you might face, issued by the IRS itself.
There is a lot to keep in mind, but I hope this gives you a basic idea of how to manage your expenses for deduction. While taxes aren’t the most exciting topic for filmmakers and videographers, understanding their ins and outs can save you a lot of money. Do your homework, and enjoy the extra money when it’s all said and done.
These suggestions are based on the most common tax cases and are not legal advice. Please consult a CPA should you have any questions about your taxes.