Phones

		Phones: Cell and/or Home
*In Actor Speak* Obviously the use of a telephone is a necessary tool for a performer. However, the cost of just having the phone is not a deduction. Only the actual expense related to seeking employment or the result of using the phone while working (such as a cell phone on location) is a legitimate write off. Note the highlighted section. Don't be too concerned about the legalize here. Your preparer will figure that all out for you. Bear in mind, the statement about using the cell phone while on location referred to the need for "business calls" only, not personal calls while you are sitting around the set. Just because you aren't home doesn't give you liberty to start billing the government for all of your calls, just those that you make in order to earn more money. This is the most important aspect of proving a legitimate deduction: You must be able to prove which calls are business related. We should note that some people are eliminating a home phone (land line) completely and using a cell phone for ALL of their needs. As the IRS does not allow the costs of your primary phone (except for business expenses) this can be a possible problem in an audit if your cell phone has become your primary phone. Consider keeping a land line (or perhaps a second cell phone with pre-paid minutes to save money) to validate the use of the cell phone you use for business purposes.		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. Telecommunication Expense This deduction is common among taxpayers in the entertainment industry. The expense must be ordinary and necessary to the taxpayer's trade or business. More specifically, it must be necessary, which will be the key to allowability. To determine the allowable deduction amount, the taxpayer must show specifically how the allocation was derived. A general verbal explanation is not sufficient. Specific allocation through monthly sampling would probably be the best technique. Answering services are usually allowable in full. Car phones should only be allowed for those trades or businesses in which the income potential depends heavily on prompt communication. Cellular telephones placed in service after 1989 are considered "listed property." Therefore, MACRS will only be allowed if the cellular phone is used more that 50 percent for qualified business use (7-year property). If the business use is 50 percent or less, alternative MACRS must be used (straight-line over a 10-year period). As listed property, cellular phones are also subject to the record keeping and substantiation requirements. Any telephone expense must be incurred as a result of work and be required by the employer who has hired you. In general, most productions do not require performers to use a phone for most of the work that a production entails. If the expense is incurred for job search, the taxpayer must document which calls are business calls. *Back to Topics*

Phones:
Cell and/or Home

In Actor Speak

Obviously the use of a telephone is a necessary tool for a performer. However, the cost of just having the phone is not a deduction. Only the actual expense related to seeking employment or the result of using the phone while working (such as a cell phone on location) is a legitimate write off.

Note the highlighted section.

Don't be too concerned about the legalize here. Your preparer will figure that all out for you.

Bear in mind, the statement about using the cell phone while on location referred to the need for "business calls" only, not personal calls while you are sitting around the set. Just because you aren't home doesn't give you liberty to start billing the government for all of your calls, just those that you make in order to earn more money.

This is the most important aspect of proving a legitimate deduction:

You must be able to prove which calls are business related.

We should note that some people are eliminating a home phone (land line) completely and using a cell phone for ALL of their needs.

As the IRS does not allow the costs of your primary phone (except for business expenses) this can be a possible problem in an audit if your cell phone has become your primary phone.

Consider keeping a land line (or perhaps a second cell phone with pre-paid minutes to save money) to validate the use of the cell phone you use for business purposes.

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.

Telecommunication Expense

This deduction is common among taxpayers in the entertainment industry. The expense must be ordinary and necessary to the taxpayer's trade or business. More specifically, it must be necessary, which will be the key to allowability.

To determine the allowable deduction amount, the taxpayer must show specifically how the allocation was derived. A general verbal explanation is not sufficient. Specific allocation through monthly sampling would probably be the best technique.

Answering services are usually allowable in full. Car phones should only be allowed for those trades or businesses in which the income potential depends heavily on prompt communication. Cellular telephones placed in service after 1989 are considered "listed property." Therefore, MACRS will only be allowed if the cellular phone is used more that 50 percent for qualified business use (7-year property). If the business use is 50 percent or less, alternative MACRS must be used (straight-line over a 10-year period). As listed property, cellular phones are also subject to the record keeping and substantiation requirements.

Any telephone expense must be incurred as a result of work and be required by the employer who has hired you. In general, most productions do not require performers to use a phone for most of the work that a production entails.

If the expense is incurred for job search, the taxpayer must document which calls are business calls.

Back to Topics