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Part 2
Tax Strategies: Travel, Entertainment,
& Other IRS 'Red Flag' Deductions ...
  
By Kristin Delfau, EA
Delfau Tax & Financial Services
 
In the first part of this series, I talked about some of the clearer expenses that do and do not count as deductions in your voice-over work.
 
In Part 2, we review murkier and IRS "red flag” items like meals, entertainment, travel, and all the good stuff that costs a fair amount of money!
 
TRAVELIN' VO ...
 
So what counts as a deductible travel expense?
 
Under IRS code, "traveling expenses, including amounts expended for meals and lodging while away from home in the pursuit of a trade or business” are deductible.
 
But then the question is, what is "home”? Generally, this usually means your principal residence, i.e. where you live or your regular place of business.
 
Travel expenses that can be deducted include train tickets, airfare, cab fare, lodging, tips, and other ordinary and necessary expenses, including paying for Internet access in a hotel.
 
SLEEPOVERS ...
 
To deduct travel expenses for overnight stays, you must be:
  • away from your "tax home” longer than an ordinary work day, and
  • away long enough that you cannot reasonably be expected to complete the trip without sufficient sleep or rest.
Be careful, though. For instance, if you are attending a conference that lasts one day while visiting with family for a week, you cannot deduct the airfare or travel expenses.
 
However, you can deduct any business-related expenses, such as conference fees, travel to and from the meeting place, etc.
 
EAT & ENTERTAIN ...
 
A portion of your work as a voice-over artist may include taking clients, potential clients, and business associates out to lunch, dinner, or other forms of entertainment.
 
Unfortunately, the deductibility of these expenses is far from automatic! Generally:
  • You can receive a deduction of 50% of the cost of the meal in which business was discussed before, during or after the meal.
  • If you are away on business and dining alone, you can deduct 50% of the cost.
  • If you order lunch for a staff meeting or employees working overtime, that is 100% deductible.
  • If you take your clients to see a show or sporting event associated with business discussion, the cost of those tickets is 50% deductible.
  • Transportation to and from the above event is 100% deductible.
FYI: Most professional tax software will automatically deduct 50% for you, so provide your tax preparer with the full amount.
 
LOOK AT YOU ...
 
Deductions for physical appearance are tricky.
 
Claiming make-up, physical conditioning, and cosmetic surgery as job expenses will come under IRS scrutiny. They want to make sure you are really doing it for your job and not for your own personal pleasure (wouldn’t want that, would we!).
 
One case that did win against IRS in tax court was a situation where a stripper successfully argued that her breast implants were a necessary work expense.
 
INDUSTRY INFO ...
 
When it comes to performers, claiming deductions for theater tickets, purchasing CDs, DVDs etc. with the intention of "staying current” in the industry are some of the ultimate IRS red flags.
 
If questioned, there would have to be a true, demonstrable connection to a particular project or performance.
 
However, if you subscribe to trade magazines, journals or updates, these are less controversial and usually deducible.
 
WHAT YOU WEAR ...
 
Wardrobe costs are often another area of contention.
 
You can deduct wardrobe expenses if they are necessary to perform your job and the clothing would not be suitable for street wear. A chicken costume is deductible; an expensive pair of jeans to wear to an audition is not.
 
Hopefully, this information helps clarify some grey areas for deductions. But be sure to keep detailed records, just in case anyone asks!
 
ABOUT KRISTIN ...
 
Kristin Delfau is the president of Delfau Tax & Financial Services in Danbury, CT and the author of Turbo-Mom’s Guide to Saving Money Without Wasting Time (Aji, 2009; www.turbo-mom.com). She specializes in flat fee tax preparation and life insurance solutions for individuals.
 
 

 

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Comments (2)
Janice
1/26/2017 at 3:08 PM
Very helpful information.

Kristin, thank you.

Janice
Paul Payton
1/15/2010 at 1:06 AM
Righteous info; same stuff I know from my accountant. Thanks, Kristin; you're the real deal.
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