Entertainment Tax Preparation: What’s Changed with the Tax Reform

Art director checking the photos on a monitor during photoshoot

Burbank, California is full of creative types, and whether you’re an actor, agent, director, or publisher, keeping track of expensable and non-expensable deductions for tax purposes can be a hassle.

From dining with clients to hosting industry parties, your end-of-the-year expenses are bound to be drastically different from those working a 9 to 5 office job, so it’s important you have a tax accountant who is familiar with the entertainment industry.


What’s Changed for Entertainment Industry Deductions in 2019

The 2018 Tax Reform recently made changes to deductions previously enjoyed by those in the Entertainment Industry. Here’s a quick run-down of what’s changed:


  1. New Deduction Rules for Individuals

New to 2018, individuals cannot deduct more than $10,000 for state and local taxes or declare itemized deductions for work-related expenses. While this may not effect the average joe, those in the entertainment field with six and seven digit incomes can be hit hard, especially with California’s high income tax. So how do you avoid this? Consult with your tax accountant to see if setting up an LLC for income is right for you.


  1. Entertaining Clients

Taking clients out to fancy bar or to a professional sports game has long been a tradition in the Entertainment industry for attracting new clients and keeping current clients happy. In the Old Tax Code, you could write these expenses off 50%, however, with Trump’s new tax laws, you cannot deduct any expenses for entertaining clients at all. This also includes expenses for amusement such as golf outings, concerts, and country club dues.


  1. Employee Meals

Don’t be surprised if you see changes to Crafts Services selections in the near future. For businesses like production companies, under the old tax law, meals provided for employees at the expense of the employer were 100% deductible. Now, employers can only deduct 50% of meal expenses. Moreover, this deduction will be completely done away with after 2025.


Don’t Know What’s Deductible? Talk To One Of Our Entertainment Tax Experts!

If you’re in the Entertainment Industry, it is important to sit down with your tax consultant as soon as possible to determine which deductions (if any) you might still be entitled to. While many of the changes above were made nationally, the State of California did not conform to all entertainment tax changes, so depending on where you are located, your tax consultant can provide you with additional insight.


Robert Hall & Associates Tax Consultants logoRobert Hall & Associates has chosen to specialize specifically in Entertainment Tax. From contract negotiations to the handling of royalties, we’ve developed a preparation method specifically for entertainment professionals to increase profitability and decrease tax liability. Call us today at (818) 242-4888 or fill out a contact form to speak with an Enrolled Agent to discuss your tax problems today!

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