Freelance and tax write offs.

[Turboguard]

So I'm stupid and haven't done this before but this year I got quickbooks to finally be serious about taxes and I have some questions to all of you who freelance.

 

What exactly do you write off? I've measured my office space in my house and all that, but then looking at other stuff like meals, can I write my lunch off everyday? And what about web services like Hulu, Netflix, Google Drive etc. Do you write that off to? This is all so new to me so please tell me everything you want to share. I literally put a video game I just bought as business because it's "cinematic", and I might learn something (lol). Yeah, everything, and were to draw the line. 

 

Thanks in advance!

[Otago]

It is very dependent on your local tax laws, in the UK for instance, you can get into trouble claiming a percentage of mortgage payments based on square footage when it comes time to sell. My chats with accounts have always saved me more than they have cost, but I file myself and only go to them when everything is properly formatted for advice. 

[fuzzynormal]

Are you American?  If so, you can certainly write off just about everything reasonable as business related.  If you get audited you'll have to justify it to the govmint though and they may not agree.

[Kisaha]

3 hours ago, fuzzynormal said:

Are you American?  If so, you can certainly write off just about everything reasonable as business related.  If you get audited you'll have to justify it to the govmint though and they may not agree.

That may be the case in some European countries as well. I am being careful with those because the fines can be devastating here.

[kaylee]

@Turboguard i make an LLC for EVERY creative endeavor. therefore, i become an employee of myself, and pay myself a reasonable salary. the rest of the $ stays in the business ?

https://www.legalzoom.com/articles/why-do-film-companies-form-an-llc-for-a-movie

[Trek of Joy]

On 8/29/2019 at 11:20 AM, Turboguard said:

So I'm stupid and haven't done this before but this year I got quickbooks to finally be serious about taxes and I have some questions to all of you who freelance.

 

What exactly do you write off? I've measured my office space in my house and all that, but then looking at other stuff like meals, can I write my lunch off everyday? And what about web services like Hulu, Netflix, Google Drive etc. Do you write that off to? This is all so new to me so please tell me everything you want to share. I literally put a video game I just bought as business because it's "cinematic", and I might learn something (lol). Yeah, everything, and were to draw the line. 

 

Thanks in advance!

I'm in the U.S., so my knowledge is based on our tax laws. First, I'd talk to a tax accountant and setup a LLC so your personal property is separate from your business. Second the IRS says deductible expenses must be ordinary (something typically used in that field, so cameras yes, mountain bikes no) and necessary. Eating is not a business expense, lunch with clients is different. For gear you can follow a depreciation schedule. For vehicle related expenses track mileage religiously, and then you can deduct a portion of maintenance expenses along with mileage. Don't see how Netflix or a video game can be classified as a business expense, but a percentage of your utilities, internet service, house payment and so on - yes. I'm also not a fan of making myself a target for an audit, so I stick to what can clearly be defined as a business expense. 

Also, the IRS - assuming you're American based on your location - has everything laid out in glorious government confusion here: https://www.irs.gov/businesses/small-businesses-self-employed/deducting-business-expenses

Chris

[HockeyFan12]

Where is there information about depreciation schedules? What determines whether you use one or do a normal write off?

I know directors/screenwriters who write of Netflix and movie tickets, btw. I don't, but I don't think it's unheard of.

[thebrothersthre3]

7 hours ago, HockeyFan12 said:

Where is there information about depreciation schedules? What determines whether you use one or do a normal write off?

I know directors/screenwriters who write of Netflix and movie tickets, btw. I don't, but I don't think it's unheard of.

Yeah it can fall under research haha

[Trek of Joy]

On 8/30/2019 at 3:09 PM, HockeyFan12 said:

Where is there information about depreciation schedules? What determines whether you use one or do a normal write off?

I know directors/screenwriters who write of Netflix and movie tickets, btw. I don't, but I don't think it's unheard of.

Cameras and computers - to the best of my knowledge - are not a capital expense as they'll be in service for years, so you must depreciate. You can't just buy $10k in lenses and write them off, people could easily game the system and "go out of business" following a massive tax break. The rules are below. And I suppose some can justify Netflix as a business expense, if you shoot weddings probably not, there aren't enough Big Fat Greek Wedding movies to make that work, haha. Its $16/mo, I personally wouldn't risk being flagged for an audit for something that nominal trying to justify what percentage of your subscription is personal vs. business. But that's me. Like I said, I have no desire to get on the IRS' radar. I'd still recommend a consult with a tax accountant, they can take a look at your business and lay everything out, one hour of their time is worth it compared to the many hours you can spend going through IRS documents and trying to figure out how the laws apply to you.

Chris

Pub 946 has info about depreciation.

https://www.irs.gov/publications/p946

Requirements: 

You can depreciate most types of tangible property (except land), such as buildings, machinery, vehicles, furniture, and equipment. You also can depreciate certain intangible property, such as patents, copyrights, and computer software.

To be depreciable, the property must meet all the following requirements.

It must be property you own.

It must be used in your business or income-producing activity.

It must have a determinable useful life.

It must be expected to last more than one year.

[CyclingBen]

Not to get too political but kinda very political, but since 2017 I've been in the camp of "write it off, write it off and write it off again" because the IRS under Trump is far less likely to audit you or deny a deduction.  I don't agree with his tax policy, but if I can keep a few dollars out of the concentration camps, I'm going to go for it.  Basically, depreciate your camera assets using bonus depreciation (lenses, cameras) and use normal depreciation for computers. For my 2018 taxes I got $9K back without an audit by putting my Fuji camera purchases (x-t3 and x-h1), lenses and a used iMac pro.

Maybe I'm nuts and just screwing the future but when the US elects racists and facists to office I want to take full advantage of their regressive policies and during democratic administrations pay more taxes to support the policies I agree with.

[HockeyFan12]

Thanks, I'll have to find an accountant, but that's a good start. Appreciate the advice.

@CyclingBen yeah that's just the type of stuff I'm writing off this year. Or plan to. A little tricky since I mostly do post work now but am moving more toward shooting again a bit more (but also might scale down my freelance work and do more work as an employee). Looks like I definitely need an accountant. Thanks again.