Real-Life Math
Since many actors are self-employed by definition, they are allowed
to "write off" certain expenses. This means that they won't have to pay
tax on the money they earn that they spend on work-related expenses.
You
have just finished a good year, doing several commercials and two plays. Your
total income was $39,640 for the year. That puts you in the 12 percent tax
bracket -- that is, you have to pay 12 percent of your income to the federal
government.
The first thing you have to do is calculate your total
taxable income. Remember, you get to write off your employment expenses. So
you open up an old shoebox where you keep all your receipts. This is what
you find:
You have $1,015 in gas receipts. Your car insurance
was $850. About 50 percent of the driving you did was for work purposes.
Occasionally,
you met with your agent and directors over dinner to discuss work. Your restaurant
bills add up to $367.
You went to see a number of plays. Since this
qualifies as "research and development," you add up the price of those tickets.
They total $75.
Since watching TV is also partly research
and development, you claim 40 percent of your $450 cable bill.
Clothing
for auditions adds up to $188.
You took an acting workshop in May.
That cost $250.
You also may claim a portion of your rent -- $1,300.
The
government allows everyone a basic personal deduction of $13,850.
- How much tax will you have to pay this year?
- How much did you make after taxes?