Filing Taxes as a Voiceover Actor or Professional
What follows is my personal view as a voice actor and CPA and does not constitute tax advice which should be sought from a qualified tax professional.
While I’m a voiceover actor as well as a CPA, even with my credentials, pivoting from the creative to the analytical can be a jolt for me, far less for anyone else for whom numbers are not second nature. Filing taxes ranks as one of the more complex and least rewarding tasks on our collective lists, but it still merits due time and attention. Here’s how a voice actor should prepare to file their annual tax return in the United States:
Understand Your Employment Status
Assess whether you’re a independent contractor or an employee. Most voice actors are classified as independent or freelance contractors, meaning you're responsible for paying both income tax and self-employment taxes. If on the other hand, you’re an employee, these taxes will be deducted on your behalf from your compensation.
Gather Your Documents
Collect all 1099 forms from clients who paid you $600 or more during the tax year. If you were paid less than $600 from a client and didn't receive a 1099, you still need to report that income. Conversely, if you’ve paid $600 or more to any third parties - logo or website designers, instructors or editors for example - be prepared to provide a 1099 to those individuals.
Understand Deductible Expenses
Voice actors can deduct business expenses that are "ordinary and necessary" for their work.
The list of eligible expenses may include equipment purchases - microphones, headphones, recording software, home studio costs - as well as marketing, education, and travel expenses.
Expenses incurred for domestic travel must be justified by appropriate documentation such as a voiceover conference itinerary, and bona fide business expenses qualify for deduction even if incurred on a trip that includes leisure time as long as the business expenses can be segregated from those incurred for leisure activities. For international trips however, business expenses are deductible only if the entire trip is undertaken with the sole purpose of business/voiceover travel.
If you use part of your home exclusively for voiceover work, you may be eligible for the home office deduction. Calculate the percentage of your home used for business to deduct appropriate home-related expenses like rent, utilities, and insurance.
Keep Impeccable Records
Maintain detailed records of income and expenses. Use accounting software or work with a professional accountant to keep track of your financials throughout the year. I personally recommend Wave as a platform for this. Among its many accounting functions, it can link to a credit card and download expense data for which receipts can be uploaded as supporting documentation. This will pay great dividends come tax return preparation time. Receipts and records for all eligible expenses should be kept and retained for a minimum of seven years.
Save for and Pay Quarterly Estimated Taxes
As a self-employed individual, you must pay estimated taxes quarterly. Overlooking this runs the risk of incurring penalties and interest. If you’re not sure how to estimate your quarterly taxes, the IRS provides ample resources on this topic so know that ignorance is no defense. Once informed, you’ll want to set aside a portion of your receipts in preparation for these quarterly payments. A common practice is to save some 25-30% of your income though the exact percentage will vary per your personal circumstances.
Know and Observe Filing Deadlines
April 15th is the typical deadline for filing taxes and paying any amounts owed. Even if you file an extension for filing your actual tax return, this does not alleviate you of your obligation to pay your taxes on time. Either mail your check by the deadline or better yet - to avoid the growing risk of check fraud - pay your taxes directly from your checking or savings account using the IRS’ secure direct pay service.
Get Help
To maximize your deductions and minimize your tax liability, either use robust tax preparation software like Turbotax or consult with a tax professional who understands the intricacies of tax law for freelancers.
Bottom Line
By starting the tax preparation process early and staying organized, voice actors can navigate tax season with less stress and possibly save money. In the name of financial literacy, stay abreast of tax laws and take ownership over the tax preparation and filing process.
