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Ask Amy Smith – Tax Secrets Revealed


by Amy Smith for The Dance Journal

This column in the Dance Journal seeks to improve the financial literacy of dancers and artists in all creative disciplines, so that they may develop sustainable practices and further expand the reach of their creativity. Questions for Amy may be mailed to askamy@philadelphiadance.org for consideration.
So as a dancer I often have to buy music, go to performances to do research, take classes, attend seminars, etc. Are these items deductible? And will declaring these run me the risk of an audit? I was told the IRS is suspicious of this sort of thing?

Dear Deductions Deducter,

Yes, all of it is deductible.  The IRS defines appropriate business deductions for self-employed people as those things which are “ordinary and necessary” to your line of work.  Their actual language is “An ordinary expense is one that is common and accepted in your trade or business. A necessary expense is one that is helpful and appropriate for your trade or business.”  So all of the things you mentioned (and more!) would fit into that description, and PLEASE don’t let fear of audit stop you from deducting legitimate business expenses.  Your chances of audit are tiny, and your best defense against an audit is simply to keep good records.  But the most important thing to remember is that the IRS wants you to deduct your business expenses.   Seriously, do it.

So in my house, I have set up a room as a mini-dance studio – wood floor, barre, mirror, etc. so that I can practice and work on choreography. Is this space then considered a home office that can be deducted on my taxes? How do I calculate the amount of the deduction?

Dear Home Studio,

Lucky you!  Your studio sounds nice – can I come over and do tendus with you sometime?  Yes, your home studio is a deduction (see above) and you would fill out form 8829 as would anyone with a home office and/or studio.  The IRS made form 8829 even simpler this year.  But basically all you need to know is an estimate of the square footage of your studio, the square footage of your entire home, and what you paid total in rent and utilities, which are considered “indirect” expenses, so you get to deduct a percentage of the costs.  In addition, whatever you spent on barres, mirrors, etc. is considered a “direct” expense and you should claim the whole thing.  Now get off your computer and go do some leg swings!

Can you explain the difference between depreciation vs. deduction. What should I be depreciating vs just deducting?

Dear Depreciator,

Depreciation is the term we use in accounting for taking into account the fact that “property” (meaning a house, car, or other thing that will last for a long time) loses value over time.  So when you own a rental property, you get to deduct depreciation as an expense every year, even though there was no hard cost to you.  I imagine you might also be talking about things like computers and sound equipment, which are also known as “amortizable” expenses.  For items like a new laptop you purchased for work, the IRS will allow you to take the entire expense in the year you incurred it, or to spread it out over the useful life (5 years for a computer) of the thing.  Which you choose will depend on some other factors, like how many other deductions you have that year, so put that item in last and test some scenarios in your tax software before deciding.

As a dancer, I use my car quite a bit to go to rehearsals, classes, performances, etc. Can I use automobile expenses as a deduction? If so, do I do the standard mileage deduction or just a direct write off to expenses? What records do I need to keep for either method?

Dear Gas Guzzler,

Yes, me too!  In more that 10 years of doing tax prep, I have never known anyone who used the direct expense deduction for their car.  The standard mileage deduction is much simpler, and therefore much better.  The IRS would love for you to keep a notebook in your glove compartment, but who does that?  Really, you should just do what I do which is write down “Lantern show 70 miles RT x 40 trips = 2800” etc. on your business deductions worksheet.  Estimating is fine if it’s based in reality.  And don’t forget to add parking and tolls (again, fine to estimate!) to your deduction.  When crossing the Walt Whitman bridge, I often think of his fine quote “resist much, obey little”.  But I don’t think he was talking about the IRS…

What software to you recommend for doing my taxes? I use quickbooks, so is there something that works well or integrates with it?

Dear Really-I-Don’t-Work-For-Intuit,

I love Quickbooks.  Really I do, it’s an awesome piece of software.  I used to use Turbo Tax to do my own tax prep, but now I use the tax pro version, called ProSeries.  But I still love Turbo Tax.  I think it’s about $90 to buy the version that lets you file Schedule C, but it’s worth every penny in ease of use.  And you can write off that $90 next year!  I haven’t tried importing expenses directly from QB into TT, but I bet it’s possible because they are made by the same company.  I’ve also tried Tax Slayer and Tax Act and I gotta say they are pretty clunky with Schedule C.  Much cheaper, but if you spend 3 extra hours doing your taxes, it’s no longer worth it.  So please buy Turbo Tax and let me know how it goes!


The information provided on this site and accompanying material is for informational purposes only.  It should not be considered legal or financial advice.  You should consult with an attorney or other professional to determine what may be best for your individual needs. Neither PhiladelphiaDANCE.org, The Dance Journal or Amy Smith does make any guarantee or other promise as to any results that may be obtained from using this content. No one should make any investment decision without first consulting his or her own financial advisor and conducting his or her own research and due diligence. To the maximum extent permitted by law, PhiladelphiaDANCE.org, The Dance Journal or Amy Smith disclaims any and all liability in the event any information, commentary, analysis, opinions, advice and/or recommendations prove to be inaccurate, incomplete or unreliable, or result in any investment or other losses.Content contained on or made available through the website is not intended to and does not constitute legal advice or investment advice and no attorney-client relationship is formed. Your use of the information on the website or materials linked from the Web is at your own risk.

- Amy Smith

Amy Smith is a founder and Co-Director of Headlong Dance Theater, a Philadelphia-based contemporary dance company. Since 1993, Headlong has created collaborative dance theater works, and toured nationally. Recent projects include This Town is a Mystery, a series of performances created in collaboration with (non-professional performer) members of 4 Philadelphia households, followed by a potluck dinner; More, which was created after two years of creative provocations from choreographer Tere O’Connor; and Red Rovers, which uses the true story of the Mars Rovers, Spirit and Opportunity, as a dramaturgical starting point. Amy graduated from Wesleyan University, then spent a year studying at the Center for New Dance Development in Holland.

Outside of Headlong, Amy has performed in the work of Deborah Hay, Ishmael Houston Jones, among others. She has also performed extensively in theater and cabaret, and has won both a Barrymore (Philadelphia Theatre Award) for 1812 Productions’ Suburban Love Songs and a Bessie (New York Dance Award) for Headlong’s ST*R W*RS and other stories. In 2008, Headlong opened the Headlong Performance Institute, an experimental performance school for young artists offering full college credit. Amy is Finance Director for Headlong, and often serves as a mentor to younger artists and companies in Philadelphia. She worked for many years doing business management in the for-profit world, and served as Treasurer on the Dance/USA board of Trustees. She also chaired a committee that successfully created a new dance service organization for Philadelphia: Dance/USA Philadelphia. Amy teaches workshops in Financial Literacy to artists through the Creative Capital Professional Development Program, and does tax preparation for approximately 75 artists annually.

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