The one rule that explains everything
You don’t have one income. You have two.
Every confusing tax question you’ve ever had starts here: is this dollar W-2 or 1099? Those two piles play by completely different rules — and once you can sort your money into them, the rest of this page is easy.
Your W-2 pile
Union jobs, paid through payroll companies
- Booked union work — principal, background, all of it
- Residuals (withheld at a flat rate that's probably not yours)
- Taxes come out before the check hits your account
- Your expenses? Not deductible federally since 2018. Ouch.
- But CA, NY & some states still let you deduct them at the state level
Your 1099 pile
Self-employment — the 'nobody withheld anything' pile
- Non-union gigs, coaching, teaching, content money
- Nothing's been taxed yet — that bill is coming
- You set aside as you go and pay quarterly
- The good news: your expenses deduct in full here
- Commissions, headshots, classes — all of it counts
The 2018 problem
The deduction every actor remembers is gone.
Once upon a time (okay, before 2018), you could write off your agent’s commission, your classes, your headshots, your dues — even against union wages. Then the 2017 tax law took that away, and the 2025 tax law made it permanent. If all your income is W-2, the federal government now shrugs at every dollar you spend on your career. Yes, it’s as unfair as it sounds.
But two doors are still open. Door one: a bunch of states — California and New York very much included — never went along with the change, so those write-offs still count on your STATE return. Door two: any 1099 income you have. The moment you earn self-employment money, those same expenses deduct in full against it.
The $16,000 rule
The one rule written just for you (that helps almost no one).
There IS a federal exception made specifically for performers — the Qualified Performing Artist deduction. Sounds great, right? The catch: it only kicks in if your whole year’s income is $16,000 or less. That number was set in 1986 and has never been updated. Not once. Book two national commercials and congratulations, you’ve out-earned a rule from the Reagan administration.
There’s a bill that would fix it — the Performing Artist Tax Parity Act would raise the cap to $100,000, and SAG-AFTRA has pushed it for years. It hasn’t passed. Until it does, file QPA under “fun trivia,” not “tax strategy.”
The loan-out
Why the big earners all have an 'Inc.' after their name.
Ever notice how established actors get paid through mysterious little companies? That’s a loan-out: a company you own that “loans” you to productions. The production pays your company, your company pays you — and suddenly your commissions, dues, and coaching are the company’s business expenses. Deductible again. It’s the legal workaround to the 2018 problem above.
Before you sprint to incorporate: it’s a real company with real overhead — payroll runs, a corporate tax return, and state fees (California charges $800 a year just for existing). The math usually only works at high, steady six-figure income. WorkMade watches your numbers and will tell you when it’s time for that conversation.
Residuals
Residuals: the fun money with a catch.
The green envelope shows up, it’s $312 for a show you did two years ago, and life is good. Here’s the catch: the payroll company withheld a flat rate that’s almost certainly not YOUR rate. If your bracket is higher, April sends a bill. If it’s lower, you just gave the IRS a free loan. The fix is gloriously boring: when a check lands, note the gap, set it aside, move on with your day. WorkMade does that part automatically — it’s very good at boring.
On location
Every state you shoot in wants a word.
Wages earned in another state are generally taxable in that state. A Georgia shoot, a New Mexico feature, a Vancouver unit — each can mean a nonresident return, a home-state credit, and payroll withholding that may or may not have been pointed at the right state. The multi-state mess is mechanical, not mysterious; it just needs someone keeping the ledger of where every dollar was earned.
Performer questions, answered.
Are my agent's commissions tax deductible?
It depends which pile the income came from. Against 1099 (self-employment) income: yes, fully — commissions are a normal business expense. Against W-2 union wages: no, not federally — that deduction went away in 2018 and it's now permanent. Some states, including California and New York, still allow it on the state return. Bigger earners get around the whole thing with a loan-out company, which pays commissions as a business expense.
Are headshots, classes, and self-tape gear deductible?
If you have any 1099 income from performing — non-union gigs, coaching, content — then yes, those costs generally deduct against it. If every dollar you earn is W-2, they don't count on your federal return under current law (annoying, we know), but they may still count on your state return.
Are SAG-AFTRA dues deductible?
Not against your W-2 wages on the federal return — that door closed in 2018. But they can deduct against related 1099 income, and several states still let you claim dues on the state return. So don't throw away the receipt.
How are residuals taxed?
Like regular income — there's no special residuals tax. They usually arrive as W-2 wages with a flat federal withholding rate, and THAT's where the trouble starts: the flat rate is almost never your actual rate. The April surprise isn't a mystery tax, it's just a withholding mismatch that nobody was watching.
What is the Qualified Performing Artist deduction?
A special deduction written just for performers back in 1986 — with an income cap of $16,000 that has never once been updated for inflation. Earn more than that in a year (so, almost everyone) and you can't use it. A fix called the Performing Artist Tax Parity Act keeps getting introduced in Congress and keeps not passing.
Do I need a loan-out corporation?
Probably not yet — and definitely not just because someone at a party said you should. A loan-out is a company you own that productions pay instead of paying you, which turns your career costs back into deductible business expenses. It also costs real money to run: incorporation, payroll, a separate tax return, and state fees (California charges $800 a year minimum). The math usually works at high, steady union income. Talk to a professional with your actual numbers first.
I shot on location in another state. Do I owe taxes there?
Probably, yes. States tax money earned inside their borders, so a location shoot usually means a nonresident tax return there, plus a credit on your home-state return so you're not taxed twice. The payroll company often withheld for that state already — so some of it's prepaid — but the return itself usually still has to be filed.
Book the job.
We’ll handle the taxes.
WorkMade knows both piles of your income, plays by each one’s rules, and will never, ever mistake you for a generic freelancer.
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