A concert at Red Rocks Park and the Amphitheater outside Denver.
John P Kelly | The Image Bank Unpublished | .
With the pandemic turning over in which Americans live And work, many now face dizziness maze of income tax issues.
However, the workers in some industries, such as entertainment, have been busy with these problems for years.
Musicians in tours, TV hosts, athletes, film crews and other entertainment professionals working in the United States have tried their hand at with tax issues long before Covid-19, financial experts say.
Entertainers and sports professionals are often caught in the web of various state and local income taxes, said Chris Cooper, a certified financial planner at Chris Cooper & Company in San Diego.
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Typically, workers owe taxes in they home state, where I am spend more of their time, just a home, register at car, vote And more.
When they work and pay the levies elsewhere, some states have reciprocal agreements, which allow workers a avoid double taxation.
While New York and Los Angeles are still magnets for those who work in entertainment, some professionals have moved in lower tax jurisdictions, said Jason Moll, CPA and partner of HarnarMoll LLP in Nashville, Tennessee.
For example, while there is a higher withdrawal of 13.3% in California, States like Florida, Nevada, Tennessee, and Texas can be attractive because they are tax free.
“I’ve had quite a few clients who have done this, even clients who are actors,” Moll said. “They aren’t filming year-round. “
However, if a Los Angeles transplant moves in Nashville but still spends a lot of time in California, they may have trouble proving they are no longer a resident, Moll explained.
“Your credit card the bills tell a beautiful revelation story where are you from spend your time, ”said Robert Seltzer, CPA at Seltzer Business Management in Los Angeles.
Artists on tours or athletes at work in multiple states in all the year they can have particularly complex tax problems. They need declaring income to each state, paying taxes and filing non-resident tax returns.
“If anyone is in tour, some states will have their hand out”said Seltzer.
TV and cinema they are another industry with a handful of temporary workers who may have income tax challenges.
“It really depends on what is your source? of income is, ”Seltzer said.
For example, suppose a crew based in California to move in Georgia for a new production. Those workers must withhold Georgia’s levies and file a non-residency declaration, he said. However, they will receive a credit for the taxes paid on their return in California.
“As a resident in California doesn’t hurt them because of the tax in Georgia rate is inferior, ”Seltzer said.
But if a crew based in Georgia worked in California, there may be a problem because they can’t claim a full credit for higher California taxes paid on their return in Georgia, he said.
In addition to state income tax issues, entertainers can also obtain hit with city taxes, Cooper explained.
There are local taxes in nearly 5,000 jurisdictions in all over the country, with lot of in been along the Rust Belt, like cities in Ohio and Pennsylvania, according to the Tax Foundation.
“It doesn’t matter if they’re self-employed, a W-2 employee or are they a company, “Cooper said.” These local tax authorities can persecute them because they have the right. “
City with local taxes include Detroit, New York, Philadelphia, San Francisco, and St. Louis.
For example, Philadelphia’s payroll tax, one of the highest in the country, is currently 3.4481% for non-residents.
here is the problem: Let’s say an artist is performing somewhere with city taxes. While many places offer credit to avoid double state-level taxes, the same writing-off in gender does not apply to city taxes, Cooper said.
“Your tax planning begins the day in which you step foot in another state, “he said.
those who work in different places in all the year want need a proactive approach a avoid trouble, Cooper added.
The American Institute of CPAs suggest keeping records of Everyone remote work, including the number of days in each state and municipality.
When a customer starts a new work, Cooper recommends checking out the “single” box on tax form of the employer, even if married, to be withheld more taxes from each paycheck.
Also, if they worked in the same state last year, they might skip penalties by checking their previous tax return. Provided they withhold or make tax payments estimated at 100% of last year’S net income tax, they wonnon incur in penalties, Cooper said.
However, working in a new the state could be more complicated without a previous year’s tax return. In these scenarios, someone could withdraw a tax return in white from your own state website and try to estimate the withdrawals in Base on the year is projected earnings, He said.
Sure, working with a tax professional may be the simplest way calculate withholding taxes e avoid penalties, especially when someone works in more places in all the yearCooper said.
While established entertainers can have business manager to take care of these problems, newer artists may not have the same privilege, he said.
“They need to create your own shape of representation, “Cooper said.” The … first person a start with is a tax professional. “
The pandemic has forced many Americans to work from home and some have temporarily set up remote offices elsewhere, exposing themselves to state tax issues.
At the end of 2020, around 30% of remote the workers said they were doing their job in a state other than that in they were in before the pandemic, according to a Harris Poll for AICPA.
However, more 70% of the respondents did not know teleworking in another state may affect their taxes. While many states have waived the tax return for temporary remote workers in 2020, those suspensions are lifting for 2021.
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