In Actor Speak
You should be aware that training for a new field of employment is NOT deductible; however, continuing your training for further advancement in your current field of employment IS deductible.
In other words, if I was a policeman, studying to become an attorney, the cost of my law degree would not be deductible. But those same law classes, if taken to receive a degree and, in doing so, earn a promotion within the police department, would be a legitimate deduction.
Therefore learning to become an actor is not deductible until you can show you have earned income AS an actor to validate you ARE an actor. How much income you may have to show to an auditor to establish you worked as an actor is unfortunately left in the hands of each auditor, but if you have an agent, if you are a member of the unions and you are actively auditioning then this is a much easier hurdle to overcome.
Once over that hurdle classes and workshops in the entertainment professional’s field are clearly related to their line of work. They not only educate the actor, director or dancer, but market them as well.
These costs are enormous to most performers, especially those starting out. And as valid as they are the greater the importance of the headline in the column to the right, "Once the expense has been shown to be ordinary and necessary, in the taxpayer's business, the specific record keeping requirements must be met."
When you take classes we urge you to keep your receipts. We know a lot of coaches and teachers don't like to take checks and/or give out receipts, but if they want to be treated like a pro they should act like one and accept the same level of responsibility they are demanding from you.
Unfortunately, because all too many teachers come and go, we also suggest you get some background information to substantiate they are indeed teaching or coaching professionally. If they have a website you might want to print out some of their pages in case you get audited a few years from now. It may sound silly but a check made out to a person's name does not make them a legitimate deduction just because you said they coached you on a scene.
VIEWING -- Theatre, Film and Television Expenses
See "Viewing Expenses"
NOTE the highlighted section here. Although it sounds like a license to own a horse, a motorcycle or some other expensive item that could easily be construed as a hobby, just in case you "might someday play a cowboy or ...", don't try it unless you are John Wayne.
Large expensive deductions and trips are often a red flag for the IRS. The burden of proof is on you to show that the item or trip is ordinary and necessary for your line of work or was specifically requested by the employer.
An example of this would be a trip to England, France and Germany to follow the path of World War II veterans "just in case" you ever got the chance to do a war film. That trip could cost several thousand dollars.
If you had an actual project that you were being hired for, this could well be acceptable but again, you would still need to prove that it was necessary and reasonable.
In the Words of the IRS:
"Generally, taxpayers in the entertainment industry may be entitled to deduct expenses for business meals, entertainment, and gifts. Once the expense has been shown to be ordinary and necessary, in the taxpayer's business, the specific record keeping requirements
must be met."
Educational and Research Expenses
Continuing education may be deductible by taxpayers in the entertainment industry. Qualifying expenses include books, supplies, tuition, and applicable car expense. The course must directly relate to the taxpayer's trade or business and must not qualify the taxpayer for a higher or different position.
In an effort to maintain or improve skills, stunt-persons claim a number of unusual expenses. Some of the larger items claimed include the cost of owning and maintaining airplanes, motorcycles, and horses.
Taxpayers' claims that their expenditures on these items are business-related may arguably have a germ of truth; but, these items also present so great an opportunity for abuse that they merit careful scrutiny of the particular facts and circumstances of each case.
Not only must these expenses be shown as expenses, they generally fall under the requirements as listed property. An employee can get the tax benefits of "listed property" only to the extent it can be shown that the property was:
Instead, the taxpayer may contend that the plane, car, or house was "income producing property," the upkeep of which is deductible. Ask for history of the income earned by this property, (presumably rentals). The taxpayer's argument that the property was held for the production of income is subject to type analysis, to make sure the ownership was, in fact, profit-motivated.
Research expense is incurred for a variety of reasons. If a taxpayer is incurring the expense for a specific project, there must be sufficient documentation to trace the expense to that project. If there is no reasonable expectation of income being produced on that project for the current tax year, the expense should be capitalized.
If the research is in anticipation of specific employment, there should be sufficient evidence presented to show the expectation or possibility of employment.
In all cases, the expense must be ordinary, necessary, and reasonable.
Some representatives attempt to avoid capitalization of "research" expenses. This is not a valid position. Treasury Regulations. provides that the term "research or experimental expenditures," means expenditures incurred in connection with a taxpayer's trade or business which represent research and development costs in the experimental or laboratory sense. The regulation further provides that the term does not include expenditures paid or incurred for research in connection with literary, historical, or similar projects.