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Tuesday, April 14, 2015

Filing Your Taxes When You're A Playwright

Greetings, and welcome to theater is a sport.  My name is Bobby Keniston, and this is my little piece of the internet to talk about all things theater.  Yay for me.  Got some thoughts, get a blog--- why not?

I tend to write about what's on my mind for this blog, and what's on my mind right now is taxes, since the filing deadline is tomorrow (April 15th).  Now, taxes and theater do not an exciting combination make, but, there are a few things I learned as a playwright for schools and community theaters (the "amateur" market, as it is annoyingly called) about filing taxes made from royalties that not everyone may know, so I figured I would pass it along today.

First off, if one of the companies you're published with pays royalties only once a year, then they will send you your tax information with your royalty payments.  Others that pay twice, or quarterly, will send them out with the last payment you get of the calendar year.  The forms they send you are 1099-Misc forms, for "Miscellaneous Income".  The only boxes that will have anything in them are the payers address, the payer's federal identification number, the recipient's identification number (SSN), and then box number 2 for Royalties.

Here's the important thing to remember from this blog:  nothing is withheld from your royalties.  No Federal Income Tax, no State Income Tax, no medicare or anything like that.  This fact, of course, makes a big difference in how one handles their money.

Since nothing is withheld from your royalties, that means Uncle Sam is going to want his cut come tax time.  I know some playwrights and other artists under the 1099-Misc will make quarterly payments to the IRS, a kind of withholding as soon as they receive their funds.  But most people I know, myself included, just set aside money as soon as we receive our royalties.  If I get a payment from one of my publishers in October, and say it's for $1,200.00, I will 20% and tuck it into an account that won't be touched, so that I can have it ready to pay my taxes if need be.  I found that 20% is a good enough number for me that covers the bases.  Of course, I'm very poor, so I don't have to pay too much in too often, but, you get the idea.  So, with this $1,200.00 check, I would take $240.00 of it and squirrel it away.  Not necessarily a great feeling at the time, but better than worrying about paying it down the road when it's already been spent on your new sunglasses and meal or two at a restaurant with your sweetheart.

I do the same with every check I receive for royalties.  A simple, clean 20%.

A few other things to think about:

Since being a playwright means you are your business, think about saving receipts for certain items that are for your business--- obviously paper, printer ink, writing supplies will add up over time.  Certainly any travel expenses, like to a theater conference to make connections and hawk your scripts should be able to be used as deductions.  I once heard that going to the theater as "inspiration" and "keeping abreast of market trends" can be deducted by playwrights, but in all honesty, I've never tried.  That would certainly be cool though, wouldn't it?

So, that's all I really have on the subject.  If you're a 1099-MISC like myself, and you have other suggestions, please comment below.  Hey, tell me I'm wrong, if you want to.  I've only done what has worked for me over the years, and would be happy to hear other ways of handling our precious money.

All the best to you, and thanks for reading!  Not the most glamorous post, but I hope you found it somewhat helpful.

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