• ✅ Technical and creative solutions for your film.
    ✅ Screenplay formatting help, plot and story guidance.
    ✅ A respectful community of professionals and newbies.
    ✅ Network with composers, editors, cast, crew, and more!
    🎬 IndieTalk - Filmmaking and Screenwriting help site and community.
    By filmmakers, for filmmakers since 2003

Payroll company and declaring expenses

M

Mike Regent

Hello,

If I don't go through a payroll company to pay my cast and crew can I still legitimately declare these as expenses for tax purposes? I would pay by cheque but I wouldn't deduct anyone's taxes or anything like that...

Thanks
Mike
 
Sort by date Sort by votes
If your really trying to be a business, then yes. "Pass through" home business are common. The principles are simple, its the details that get you in trouble.

You report the income on your taxes, thus you pay taxes on it. So you can also claim the business expense. The problem comes from how you pay your expenses. If you have no business income, then how are you paying your expense? Obviously from your other income sources (day job). The IRS gets that, no biggie, but If you do this for a few years and never make any income, then its sorta looks like your not really a business, you look like a hobby. Which means you've got some explaining to do. If you are a legit biz, say you have a biz plan, and corporation, then you can make a case for being a bad business person, not just a sneaky hobbyists. Bad biz person = OK, sneaky hobbyist = NOT OK.

See a tax adviser and biz attorney for confirmation and clarification.
 
Upvote 0 Downvote
Do yourself a favor and just use a payroll company. Not sure what the laws are in CA regarding Workers Comp and Unemployment Insurance, but here in NY if you pay your crew by check and don't take out taxes figuring the crew/actors are independent contractors, you are setting yourself up for a shakedown. If so much as one of your crew/actors files for Unemployment Insurance after the shoot (and believe me, at least one will) you may face an audit from any number of agencies and be forced to pay back taxes for everyone you hired. Been there and done that. The extra dollars you will spend on a payroll service is a pittance in comparison to the money and headaches you may have to face if you try to pay your workers by check.
 
Upvote 0 Downvote
If you are employing people, then YOU ARE REQUIRED IN THE UNITED STATES by federal and state law to withhold certain taxes and pay certain fees such as unemployment insurance, worker's compensation and disability. Failure to withhold can result in CRIMINAL CHARGES, MASSIVE FINES, and other VERY BAD THINGS!

If someone is TRULY an independent contractor, i.e. they have complete control over their own work, HIGHLY UNLIKELY in the film world, then you can avoid withholding and issue a 1099 for IRS purposes to them and claim a deduction, but generally employees on a film set are employees and should be treated as such, hire a payroll company, it's not that expensive and some of them offer pay as you go worker's comp which may save you a bunch of money.

The other way to avoid this of course is to make every member of the crew a partner in the company that owns the production, but that is a lousy way to do business if you or investors are putting up money, and may be scoffed at a a sham transaction by regulators if the facts on the ground don't seem to show the transaction is legit!

Although I don't play an attorney on TV I am
one in NY, but this in no way is meant to create an attorney client relationship or to constitute specific legal advice, but rather is provided for general educational
purposes. Hope you find it useful.
 
Upvote 0 Downvote
You must log in or register to reply here.
Back
Top