Tax Circumstances in Entertainment

For professionals in the entertainment industry—whether you’re an independent filmmaker, screenwriter, actor, producer, or crew member—being affected by tax season can feel like finalizing a foreign language. But 2024 brings important changes and overlooked opportunities that could reduce your tax liability and put money back in your pocket.

In this report, we break down pivotal tax break opportunities available in 2024 specifically for entertainment industry professionals. We cover federal and state incentives, deductions, and recent updates worth noting. Whether you’re freelancing full-time or working on union contracts, here’s what you should know.

1. Expanded Deductibility for Creative Expenses

What’s new:
Thanks to recent updates to IRS guidance on freelance income and gig work, entertainment professionals can more confidently deduct expenses related to pre-production, creative development, and unreimbursed work-related costs.

What you can deduct:

• Scriptwriting software and creative tools (e.g., Definitive Draft, Adobe Suite)

• Research trips and location scouting (when documented correctly)

• Union dues and agency commissions

• Wardrobe and props (only if not suitable for everyday wear)

• Home office setups for auditions, editing, or production work

What to do:
Keep receipts and keep a log of how each expense is tied to a specific project or client. For freelancers and 1099 earners, Schedule C is your best friend.

2. Section 181: The Return of a Powerful Film Tax Deduction

What’s new:
Section 181 of the IRS tax code, which allows film and television productions to immediately deduct production costs (rather than depreciating over time), was extended through 2025 under recent legislation.

Who benefits:
Producers, production companies, and investors in qualifying domestic productions with budgets under $15 million ($20 million if shot in certain low-income areas or zones).

How it works:
Instead of spreading deductions over several years, production costs can be deducted in the year the money is spent. This improves cash flow and makes projects more attractive to investors.

3. State-Specific Film and TV Tax Incentives

What’s available:
Many states offer tax credits or rebates for qualifying production expenses incurred in-state. 2024 sees increased funding or expanded eligibility in pivotal markets:

• California: Film & TV Tax Credit 3.0 includes incentives for new series, relocating shows, and independent projects.

• Georgia: Continues to offer up to 30% transferable tax credits—still one of the most reliable in the U.S.

• New York: Expanded post-production tax credit and added bonuses for hiring varied crew.

• Illinois & New Mexico: Introduced additional incentives for local hiring and below-the-line crew.

How to qualify:
Each state has its own guidelines, spend thresholds, and application timelines. Consult with a production accountant early to ensure compliance and boost return.

4. Qualified Performing Artist Deduction (Line 24 of Schedule 1)

Who it’s for:
If you’re a W-2 employee earning less than $21,000 annually from at least two employers and your performing expenses exceed 10% of your income, you may qualify.

Why it matters:
Even though most unreimbursed employee expenses were eliminated in the 2017 tax reform, this deduction still stands and can reduce your adjusted gross income.

Pivotal tip:
Keep detailed records of travel, audition expenses, coaching, training, and professional development. You must itemize and meet specific thresholds to claim this.

5. Health Insurance & Retirement Contributions for Freelancers

Health insurance deduction:
If you’re self-employed, you may deduct 100% of your health insurance premiums—including those for your spouse and dependents—without itemizing.

SEP IRA and Solo 401(k):
These retirement options allow freelancers to contribute pre-tax income, reducing taxable income although saving for the . In 2024:

• SEP IRA limit: Up to $69,000 or 25% of income (whichever is less)

• Solo 401(k): Up to $23,000 ($30,500 if over 50) plus employer contributions

6. New 1099-K Reporting Threshold Delayed (Again)

What changed:
The IRS planned to lower the 1099-K threshold to $600 for third-party platforms (e.g., PayPal, Venmo, Etsy). But, for 2024, the threshold remains $20,000 and 200 transactions.

Why it matters:
This gives freelancers and gig workers more breathing room—but it’s still smart to track all income, even if you don’t receive a formulary.

Definitive Thoughts: Work with a Pro Who Knows Entertainment

Taxes in the entertainment industry are rarely straightforward. Between multiple income sources, project-based contracts, and irregular pay schedules, the risk of missing out on deductions or mishandling filings is real. A tax preparer or CPA familiar with the nuances of entertainment can help you boost deductions and ensure compliance.

Start now:
Critique your 2024 expenses, gather helping or assisting documentation, and peer into how you can qualify for some of these deductions or credits before the year ends.

Disclaimer: This report is for informational purposes only and not tax advice. Always consult a licensed tax professional before making financial decisions.