Last week I posted a blog entry about the new tax code and how it affects us as voice talent. It received some praise from y’all so thank you for the kudos. It also raised some questions and I’m happy to go over them. A big thank you to Sharon Feingold and Steven Jay Cohen for asking such thoughtful questions and helping to make some needed clarifications. You guys rock!
Q: Does the IRA annual contribution limit of $5,500 apply to SEP IRA’s?
A: No! a SEP IRA is a Simplified Employee Pension IRA. It functions like a regular IRA but you can contribute up to 25% of your annual income or $55,000, whichever is lower. It’s great for voice talent when you have a good year and want to sock away that extra money. To see all the 2018 retirement plan contribution limits, click here.
Q: Does the new 20% business deduction stack with the business expenses we can currently write off?
A: Maybe! I think that means you can deduct 20% of your business income right off the top and then start writing off your business expenses. If that’s the case, that’s great news.
Be aware that it may seriously drop your Gross Adjusted Income. That’s good news if you signed up for the Affordable Care Act or are applying for affordable housing. That’s bad news if you’re applying for a mortgage.
In reference to W2/union actors possibly losing their itemized deductions, this CNN Money article states that teachers can still write off school supplies as well as classes they take for continuing education and certitifcation. http://money.cnn.com/2017/12/15/pf/taxes/tax-bill-teacher-supplies-deduction/index.html. As of this writing, I am not sure if this is a “carve-out” for just educators or if it applies to everyone. If it applies to everyone, W2 actors can still itemize deductions. If you find out something one way or the other, please share!
I was also asked about agent fees not being deductible anymore. I was referring to the commission that agents and managers take when they book you for a gig. FYI if an agent or manager tries to charge you a fee of any kind to represent you: run. Fast.
Q: Where did you get the information that the SAG-AFTRA membership fee & annual dues can no longer be deducted?
A: The recent Dave Lawrence Facebook Live video that discussed the ramifications of the new tax code, which you can see here.
Speaking of the video, it has been pointed out that some basic information in the video was incorrect. To quote Steven Jay Cohen:
The C in LLC does NOT stand for Corporation. It stands for Company. It is a pass though entity by default and does not require filing business taxes. This is because LLC’s do not exist on the federal level. So the Feds ignore them and either tax you as a sole proprietor or a partnership (depending upon the number of members of the LLC). A huge amount of the advice was based upon him saying that LLCs paid business taxes, which they don’t. They can OPT to be treated as corporations.
With that in mind, I will no longer cite that video as a credible source of information for new tax code advice. I apologize for not fact-checking its content and for any confusion it may have caused.
TIP OF THE WEEK
Ignore the articles, videos, podcasts, and other content that was produced BEFORE the tax code passed! There is a ton of wrong information out there and politically motivated people & institutions disseminated data that was often biased or straight-up wrong. For example, the Hollywood Reporter article was, as far as I can tell, a pile of speculative, hysteria-inducing crap and tried to assert their views as fact before the facts were even known. Do your research and don’t let your politics or opinions of the current administration and its policies (either pro or con) get in the way of the facts!
If you think it’s right for you, there still may be time to go LLC or incorporate. If you want more information about how to form an LLC in your state, check out www.llcuniversity.com. Talk to your CPA before you make this decision!
NEWS AND NOTES
2018 is here! Did you get your **** together yet? No? So, what’s your plan? Do you even have one?
On Wednesday, January 17th @7PM EST at Abacus Entertainment I will lead the seminar “Get Your **** Together In 2018”. This class will be both in-person at their New York City studio, streamed live, and recorded for future viewing in case you can’t make it.
Use the promo code TOMSENTME to get 20% off the ticket price. FYI this promo code is for in-person attendance only. Seating as well as uses of the promo code are limited! Register now so you can get your **** together in 2018! Click here to sign up.
Thursday, January 11th @8PM EST: my next Edge Studio “Business and Money 201” webinar topic will be ‘Cost/Benefit Analysis’. Click here to sign up.
Tuesday, January 16th @7PM EST: I will be a guest of the Tennessee Voiceover Exchange! The subject: ‘Building a Rate Sheet’. Click here to learn more.
Thursday, January 25th @8PM EST: my next Edge Studio “Marketing 201” webinar topic will be ‘The Sales Funnel’. Click here to sign up.