Voice Acting & Taxes, Part Three: Organization and Your Options for Filing
It’s almost time for tax filing! So fun, right? We know this is a stressful time for everyone. But it can be especially tough for business owners, freelancers, gig workers, and contractors.
Voice actors often fall into those categories, so taxes for voice actors can be complicated. But we’re here to help.
This is part three of our voice over taxes series, where we’ll look at the importance of bookkeeping, why you may need to pay taxes quarterly and a list of deductibles voice actors can claim.
Keep reading to learn the basics of paying taxes in 2023 as a voice actor.
Paying Taxes as a Business Vs. Personal
First, you may not have to file taxes on your voice acting income. The requirements can vary concerning state taxes, but for federal taxes, you only need to report your voice acting income if it is $400 or more.
If you set yourself up as a business, meaning you have a business account, business email, etc., you may be eligible for more business expense deductions. But freelance or gig voice actors can also file their income taxes personally under their miscellaneous income.
Setting yourself up as a business is undoubtedly more work, but can be worth it in the long run, saving you money on taxes.
Paying Taxes Quarterly
The IRS allows people to pay their taxes quarterly, so they don’t have to pay a massive tax bill. However, they require freelancers and contractors to pay quarterly taxes if their tax bill is over $1,000. If you do not pay your quarterly taxes on time, you’re subject to penalty fees after filing your next tax return.
If voice acting is your full-time job, you likely made over $400, so you must pay taxes quarterly in January, April, June, and September. These tax payments are just an estimation of your income taxes, so the best way to calculate the estimated payment is to calculate 20% of your quarterly income and pay that.
So If you make $5,000 per quarter, you should pay just under $1,000 on a 1040-ES form. If you end up overpaying, you’ll get the money in your tax return.
How to Pay Quarterly Taxes
The idea of dealing with taxes four times a year sounds like a nightmare, but estimated payments are much simpler than your April tax filing.
All you need to do is estimate your quarterly income tax using the simple formula above or an estimated payment calculator. We know paying taxes as a voice actor contractor is stressful, as sometimes you don’t know where your next job will come from. But, trust us, it’s better to overpay a bit now and get it back later, than dramatically underpay and get stuck with hefty penalty fees.
Here are the simplified steps to follow when paying quarterly taxes:
- Calculate your estimated quarterly tax payment.
- Go to IRS.gov.
- Select “ Make a Payment” under the “Payments” section on the dashboard.
- Select your preferred payment method, either a direct ACH payment from your bank account or a debit/credit card transaction.
- Under “Select Your Payment” choose the “Estimated Tax” option, which sets you up to pay using a 1040-ES form. Choose the correct year and enter your estimated payment calculated in step one.
- On the next page, enter your bank account or card information.
- Process the payment and you’re all set! Be sure to save the receipt and payment confirmation just in case!
The Importance of Bookkeeping
We cannot express how vital it is to keep decent records of your income and business expenses. You need to track your payments for each gig and client and monitor your expenses related to voice acting.
The best way to track your income and expenses is by using a well-organized spreadsheet. But if you’re not very organized, keeping receipts and payment or expense-related emails can make tax time easier.
If you think you’re particularly horrendous at keeping track of your finances, an accountant who can help you determine expenses and income may be a wise investment.
So, why do you need to keep track of all this? You need to know your income to pay federal and state taxes on it. You don’t have to track your expenses, but not doing so means you’re missing out on money.
Many expenses are deductible, meaning they’ll reduce your tax bill, so you can pay less. Here are some examples of expenditures you could possibly deduct from your taxes as a voice actor:
- Travel to and from auditions or gigs
- Manager fees
- Office expenses
- Acting or voice classes
- Workshops and seminars
- Agent fees
- Mailing expenses
- Equipment and supplies
- Relevant subscriptions
- Relevant legal services
- Business use of cellphone, internet, or cable
Whether or not you can deduct these expenses is very circumstantial. For example, you can deduct food expenses while on the job, but not your at-home meals. You can deduct recording devices you use for work, but not your TV or personal computer.
Options for Filing Your Taxes 2023 as a Voice Actor
So, how should voice actors do their taxes for 2023? You essentially have three options:
- Hire a Tax Specialist or Accountant: Hiring someone to do your taxes or help you with them is the most expensive option but the least stressful (usually). If you’re terrified to deal with your voice actor taxes, using an accountant for the first year can make things smoother.
- Use an Online Tax Filer: Online tax filings sites like TurboTax, TaxSlayer, and TaxAct can walk you through filing for a fee. The cost can be anywhere between $75 and $500, depending on how much help you need. These sites are helpful for freelancers because they break down deductibles and other complex aspects of your taxes.
- Use IRS Direct Pay: This is the most complicated of the three options as the IRS website can be challenging to navigate. But if you have done your taxes on the IRS Direct Pay website previously, then you may be more comfortable using their software and filing direct through them.
The bottom line is voice actors, like everyone else, must pay federal and state taxes. If you’re new to a career in voice acting, your first year of taxes can potentially be a minefield. We hope this guide helps you navigate it. But after your first year, we promise, it gets easier.
Wanting to continue building your voice acting business? Read about How To Manage Your Freelance Voice Over Business.
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