The ABC's of Taxes for Professional Models

Let me preempt this article by stating upfront that, for as complicated as filing tax returns can be for professional models and actors, you should hire a professional to consult with when you first file as a working model. That said, there is plenty that you'll need to know going into this.
First and foremost, models must file their own personal tax return. Often, modeling agencies do not deduct taxes from a models pay so it's very easy to get into trouble with the IRS and fast!! How to avoid problems? Well, always treat this like the business that it is and second, get receipts on EVERYTHING! Why? Because it will save you come tax time.
Modeling often requires a substantial upfront investment on the part of the model to get started. Testing, compcards, portfolio and travel are not cheap and usually not covered by the agency on a new face. The good news is, all of these expenses are tax deductible business expenses that you can take off at the end of the year. How? Well, first, set up a checking account and credit card JUST for modeling related expenses. You are more likely to itemize if you are organized and make this easy on yourself. Even if your expenses are higher than your income the first few years, it especially makes sense to itemize. Losses can be carried forward for 7 years and will accrue. Then, when you really begin making money, you will have these losses that you carried forward to help offset your higher revenue. Sound like a smart strategy? You bet it is!
As a working model, you will want to list "Professional Model" as your occupation on your tax return if you are signed by an agency. If you are not signed, you may still list "Freelance Model" on your return and still itemize. You do NOT have to show an income initially while you are pursuing your career. However, if you file year after year as a working model and continue to show no revenue, that will send up the red flags at the IRS. But they do understand the concept of growing your business. And as a model, you are self-employed (not an employee of an agency) and thus, in business for yourself.
Another important thing to remember as your career expands, models must file a tax return in each state in which they work that has a state tax. They must also file a federal return. Should your career take you outside the USA, there is also a form you will need to obtain from the IRS which verifies your status as a US Tax Payer so that you will not be double-taxed on your earnings by the country you are going to work in. Basically, you are deferring taxes back to your home country. See why you need a CPA???
So exactly what is tax deductible? Which papers are important? What should you save for tax purposes? Keeping it simple, here is an outline for you... The ABC's of tax deductions. While this may not be all-inclusive, it will provide a guide of what may and may not be claimed. When in doubt, either leave it out or call your accountant to be sure. You want to get the most deductions that you are legally allowed while at the same time, not raising any flags with the IRS.
Airfare
- If you travel for relocation to another market, to test in another market, to work a summer somewhere, to go to a casting or booking, your airfare is tax deductible in full. This includes the fees if you have to change your flight also.
Bank Statements
- Keep them all. You never know when you will need to refer back to a cancelled check during an audit. Keep your bank statements for the same length of time as you file losses, up to 7 years. Open a separate bank account for all modeling related and route all income and expenses thru this account. Makes it very easy at tax time.
Credit Card Statements
- Keep them all. This is a very detailed account of what you spent and will help you get organized at filing time. Also, many companies send an annual review of the breakdown of what you charge into categories. It can help you budget for the coming year and track where your expenses are. Get a credit card specific for modeling related expenses and it will help you organize even more.
Commissions
- When you begin earning revenue, your agencies will deduct a 20% commission. Pretty standard in the industry. Some talent bookings will deduct a 10% commission. This commission, or payment to the agency, is tax deductible for you. Its income you earned but didn't bring home. Keep your check stubs from the agency or your agency statements and make sure you list all commissions on every job on your return.
Cosmetic Procedures
- Certain procedures, if deemed necessary by your agency may be tax deductible if they will make you more marketable. You must check with your CPA on this one though. If your agency wants you to have dermabrasion on a scar, get a mole or birthmark removed, have your ears pulled back or a nose job and these are things you would not have normally done, you may be able to take them off.
Clothing
- For shoots or shows. In some cases, you might be asked to purchase a particular item of clothing specifically for a show, shoot or appearance. If this is so specific an item (say, white go-go boots) that you will not be able to wear normally, then you may deduct this item off your taxes. However, if it is a mainstream item that you could normally wear in day to day activities or for other events, then you may not deduct it. In most cases, clothing will be provided. But when you are first starting out or testing, you might need something out of the ordinary to be shot in. Of course, if you leave tags attached and only wear it for a shoot, you could always return it afterwards and save the expense entirely.
Dental/Teeth Whitening - Normal cleanings or fillings are not deductible, but if your teeth are not straight, if you have silver fillings or if they are yellowish, your agency may want you to get some dental work done to make you more marketable. The key here is that it must be at your agencies instruction to be tax deductible.
Exercise Equipment/Tapes
- Of course you are going to have to be in shape to model. Many models like to work out in the privacy of their own homes rather than a meat market. If you purchase exercise equipment, pilates tapes, a yoga mat, anything pertaining to fitness for the sake of your career, then it is tax deductible. This could even include a high energy CD of music to listen to on your headphones while you are out power walking, but don't push the envelope by trying to deduct ALL your CD's.