Hi to all!
I wanted to quickly introduce myself and let any parents of child actors who might be members here know about our free educational resources for families in the entertainment industry. My name is Paula Dorn and I am co-founder of the BizParentz Foundation, a non-profit 501c3 organization. www.bizparentz.org
Some of our information is California specific, but there are many topics on our site that span all areas of the country. We have worked very hard to create resources about safety, finances, and the business of the business itself specific to families and minors. As we have no financial interest, and our volunteers, we can be the voice of reason and honesty. I found OurFilmSpace.com because of an earlier discussion regarding talent scams.
One thing that unfortunately does apply everywhere is Federal Income Tax. Many people are surprised to know that minors do indeed have to pay income tax just as their adult counterparts do. And a minor who meets filing requirements files their OWN return. Even if you have a child actor who might not be earning a lot of income yet, there are some financial recordkeeping duties that we recommend doing each year. They are mentioned in the information below.
I'm sorry that my first post here is such a yucky subject as taxes, but I just updated a quick version of our child actor tax information and thought I would share it here first.
Best to all in 2010 - and I received some friend invites that I can't seem to accept?? So, my apologies for whatever I didn't do correctly. I will familiarize myself with your great site!
CHILD ACTOR FEDERAL INCOME TAX PRIMER
Its tax time again. W-2 forms and 1099’s are to be mailed from employers on or before January 31st. Hopefully you’ve used some type of system to record jobs, employers, and Coogan (trust account) withholdings for last year. If so, it’s much easier to watch for W-2’s, contact employers for missing ones, and to verify the amounts. Be sure that gross amount for each check your child received totals what is reported on the W-2. With all the travels these checks can make (agent, manager, union), and the uncertain pay schedule (you often don’t know the check is coming until it’s there) this is a very important thing to do. If you have no system and want to recreate something to work with – we have a Coogan Tracking Form on our website that you are welcome to use, modify, and copy at will. This form will assist you in tracking each check issued throughout the year. http://bizparentz.org/californiacooganlaw.html
Now is a good time to reconcile Coogan/trust withholdings to bank statement to be sure corresponding deposits were made. It’s also a good time to review a child’s Social Security information. Please see http://bizparentz.org/socialsecurity.html
an article on the website for why and how you do that!
Minors earned income (work payment) is NEVER claimed on their parent's return. Earnings from work are different than earnings from investments – more info on that below.
The quick little chart for a MINOR filing their own income tax returns for 2009:
• Under $5,700 in gross earnings - don't have to file - should file to get back anything withheld for Federal or State taxes
• $5,701 - $16,000 in gross earnings - have to file, can use QPA (Qualified Performing Artist) if they have 2 or more employers who paid at least $200 each. Gross earnings will be reduced by the actual expenses (agent fees, manager fees, coaching, headshots) - AND they still get the standard deduction of $5,700. After taking out all of that - the taxable amount is very small.
• $16,001 and up - have to file, can't use QPA - can take a standard deduction for $5,700 OR itemize expenses if they total more than $5,700.
• In addition to the above guidelines, investment income of $950 or more, also requires that a minor file their own tax return.
There are 2 ways we all reduce our tax liability just by existing - one is via exemptions. (so for us adults that's ourselves, our spouse, and kids) and you get $3,650 off of gross earnings for each exemption this year. Minors filing their own taxes will generally NOT get an exemption, because the parents get the exemption for them.
The other way is deductions. You can either itemize deductions - or take a standard deduction amount - which is $5,700 if single $11,400 if married, etc.
These are the filing requirement amounts if someone else can claim the child as an exemption (mentioned above), which is the situation for most minors. For someone not claimed as an exemption on someone else’s return (most adults) the filing requirement for 2009 is $9,350.
There is a comprehensive Tax article on the site http://bizparentz.org/federaltaxes.html
which we recommend as a companion to this brief outline. It has been updated to reflect the 2009 tax law.
Other considerations for minors include what is commonly referred to as the “kiddie tax”. This is thoroughly discussed in the article mentioned above – but generally will only affect those who have UNEARNED income (ie...interest) exceeding $1,900. If your child is in that situation you need to read up on the ‘kiddie tax’ information. This might also be a problem for a minor who received unemployment. NOTE: In years prior to 2007 this only affected minors who were 14 or less. In 2007, the age limit was raised to 18. Again, please refer to the more comprehensive article for a more detailed explanation.
** This information, although accurate to the best of our knowledge, is not intended to replace professional tax advice.