Voice Over Freelancer Tax Tips, 2015 Edition PART ONE
Feb 06 2015
NOTE: This is the first post in a two-part article. Stay tuned next week for part two!
It’s that time of year again. One of the best tax tips we can offer is a time-tested one: Treat yourself like a business. Not only will that make you eligible for deductions that mere “hobbyists” cannot take, businesslike practices are the only reliable way to know how you’re doing and see how to grow. And in the long run, running a businesslike operation will also save you time.
That said, there are some new things to consider for 2015.
(Please note: Although we’re confident of the general validity of these tips, things change, details matter, and everyone’s situation is unique. This list might be incomplete and requirements change. Refer to your tax advisor or tax-software publisher for guidance and additional information.)
* Allow for the Affordable Care Act penalty tax, subsidy repayment, or paperwork. As we understand it, if all members of your household had adequate health insurance coverage throughout 2014 and did not receive a subsidy, you’ll find the ACA reporting pretty simple, just tick a box.
But if you were uninsured or underinsured, or insured less than nine months of the year, you may be hit with a penalty. However, this year it is a relatively small penalty, and there are dozens of possible exemptions from the insurance requirement. You may need to fill out an elaborate worksheet.
If your “advanced premium tax credit” (subsidy) amount was based on too low an estimated income, you may owe something after recalculation. A recent article in the New York Times quoted a Treasury official as saying some six million taxpayers will have to “pay a fee this year because they made a choice not to obtain health care coverage that they could have afforded.” If that’s you, and if you’ve been doing your taxes yourself, look at your forms. This might be the year to start using a professional preparer or mainstream tax-prep software … and start now.
* If you or a family member were enrolled in a plan through the Health Insurance Marketplace, watch your mail for Form 1095-A. That’s a statement showing your account data, for you to use in preparing your tax return. It will come from your Federal or your state marketplace, not from the IRS. In some cases it may not be complete or up-to-date, requiring you to use a website tool. You can learn more about this at Healthcare.gov’s tax information page.
Savings and Investments
* There have been changes in Flexible Spending Accounts (FSA) with regard to Health Savings Accounts (HSA). If you carry over FSA funds into to 2015, you are not allowed to participate in an HSA in 2015.
* In 2015, no matter how many tax-free IRAs you might have (of whatever type), you may rollover only one of them per year.
* Income thresholds for the highest federal income tax bracket (39.6%) have changed. For tax year 2014, they are:
Married Filing Separately: $228,800
Unmarried Individual: $406,750
Head of Household: $432,200
Married Filing Joint Return: $457,600
(Incidentally, if you’re making $406,750 taxable income solely from voice over, congratulations!)
* If you were paid more than $200,000 (unmarried) or $250,000 (married), you’ll pay an additional 0.9% added to the usual 1.45% for Medicare. And the amount above which you do not pay Social Security tax has increased $3,300 to $117,000. For income on which Social Security and Medicare tax amounts are automatically deducted by your employer (W-2 income), this will affect your take-home pay. For self-employed income, it will be part of your tax calculations.
On the upside, if you’re over age 66, a 1.5% cost-of-living (COLA) adjustment has upped the maximum monthly Social Security benefit to $2,642. (Depending on your average lifetime earnings, your benefit amount may be less.)
* A few years ago, the rates for estate and gift taxes were raised. However, inheritances and gifts below a certain amount are excluded, and these exclusions are indexed for inflation. In TY2014, this brings the exclusions up to $5.34 million and $14,000 respectively.
* The standard deduction, as usual, applies to you if your deductible amounts do not exceed it. For tax year 2014, the standard deductions were raise a small bit, to:
Married Filing Separately, or Unmarried Individual: $6,200
Head of Household: $9,100
Married Filing Jointly or Qualifying Widow(er): $12,400
Looking ahead, if your yearly deductible expenses don’t quite meet the threshold, your tax expert might advise you to adjust the timing of major deferrable expenses so that they all land in a single year.
* For 2015, the standard deduction will again rise a bit for some filers, to $6,300 for single filers and $12,600 for married joint filers.
* Again looking ahead to TY 2015, the Alternative Minimum Tax (AMT) exemption will be raised about 1.5%, to $53,600 for individuals or $83,400 for joint filers. The point of the AMT is that, above these amounts, everyone should incur some tax burden, even if by limiting certain significant tax breaks.
Additional details may be found at government websites, the links in this article, and the following sources:
Freelancers Union: 11 tax changes that might affect your 2015 tax return!
Tax Tips: Show IRS You’re A Biz, To Claim These Tax Deductions … By Robert Sciglimpaglia Jr
Next week, we’ll look at some other tax factors for voice artists and other freelancers to consider. They may not be new, but they might be important for you to understand and consider.
This article is intended to provide general guidelines on matters of interest to voice over artists. It is not intended to be all-inclusive. The application and impact of tax laws can be very complex and vary widely from case to case. Readers are encouraged to seek professional advice concerning specific matters before making any decisions. The author and publisher disclaim any responsibility for positions taken by taxpayers in their individual situations. This article was updated February 3, 2015.
IRS Circular 230 Disclosure: Any U.S. federal tax advice contained in this communication is not intended or written to be used, and cannot be used, by any person for the purpose of (i) avoiding tax-related penalties or (ii) promoting, marketing or recommending to another party any investment plan, transaction or matter.