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Here is the situation.

I am a US-based performer just beginning to build a following and I have secured some bookings.

The places that have booked me have offered free meals, travel, and lodging. However, I am unsure if I am supposed to pay taxes on the real value of these services.

Am I better off simply asking for enough cash to cover these expenses, paying tax on that income, then purchasing these services - or are comped meals/travel/lodging exempt from tax since I did not pay for them?

  • 1
    It's not really a duplicate question, but I think the answer to this question will tell you what you need to know. – DJClayworth Apr 4 '13 at 16:17
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My number one piece of advice is to see a tax professional who can guide you through the process, especially if you're new to the process. Second, keep detailed records.

That being said, I found two articles, [1] and [2] that give some relevant details that you might find helpful. The articles state that:

Many artists end up with a combination of income types: income from regular wages and income from self-employment. Income from wages involves a regular paycheck with all appropriate taxes, social security, and Medicare withheld. Income from self-employment may be in the form of cash, check, or goods, with no withholding of any kind.

They provide a breakdown for expenses and deductions based on the type of income you receive.

If you get a regular paycheck:

If you've got a gig lasting more than a few weeks, chances are you will get paid regular wages with all taxes withheld. At the end of the year, your employer will issue you a form W-2. If this regular paycheck is for entertainment-related work (and not just for waiting tables to keep the rent paid), you will deduct related expenses on a Schedule A, under "Unreimbursed Employee business expenses," or on Form 2106, which will give you a total to carry to the schedule A.

The type of expenses that go here are:

  1. Union dues.
  2. Apparel: Uniforms, costumes, special shoes (tap, ballet, character, or anything else not suitable for street wear) theatrical
  3. makeup, and wigs.
  4. Cleaning of work-related apparel.
  5. Education: Acting, voice, or dance lessons, or other education related to improving or maintaining your performance skills.
  6. Photographs, videos, or CDs used for self-promotion and marketing.

If you are considered an independent contractor (I presume this includes the value of goods, based on the first quoted paragraph above):

Independent contractors get paid by cash or check with no withholding of any kind. This means that you are responsible for all of the Social Security and Medicare normally paid or withheld by your employer; this is called Self-Employment Tax. In order to take your deductions, you will need to complete a Schedule C, which breaks down expenses into even more detail. In addition to the items listed above, you will probably have items in the following categories:

  1. Advertising: Promotional and marketing materials go here, as do any ads you place offering your services.
  2. Legal and professional fees: Commissions to agents, attorney fees, and tax preparation fees go here. You can also put union dues here if the membership is not tied to any one job.
  3. Auto/transportation expenses: Track your mileage to auditions, keep receipts for the bus or subway, and hang on to plane and train ticket info.
  4. Insurance: Any special insurance or bond required because of your work. NOTE: Health insurance is deducted elsewhere, so don't include that here.
  5. Supplies: Shoes, costumes, makeup and office supplies go here.
  6. Other: Postage, cell phone if devoted exclusively to work, fax or photocopy fees, classes, reference materials, subscriptions, and anything else related to getting or performing work. If in doubt, keep the receipt, note what it was for, and ask your tax professional or the IRS.

Ideally, you should receive a 1099 MISC from whatever employer(s) paid you as an independent contractor. Keep in mind that some states have a non-resident entertainers' tax, which is

A state tax levied against performers whose legal residence is outside of the state where the performance is given. The tax requires that a certain percentage of any gross earnings from the performance be withheld for the state.

Seriously, keep all of your receipts, pay stubs, W2's, 1099 forms, contracts written on the backs of napkins, etc. and go see a tax professional.

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