Jeffrey Thompson: Tax Season For Artists & Creatives

Are there any tax relief programs for those affected by the LA fires?

Yes, individuals in LA have an automatic extension for filing their federal and state tax returns until October 15. If you file in multiple states, you may still need to file an extension separately for states like New York or Oregon.

Additionally, those who lost property due to the fires may qualify for a casualty or disaster loss deduction, which allows you to claim significant losses not covered by insurance. You can apply this loss to your 2024 tax return, even though the event happened in 2025, and the deduction can carry over into future years to reduce taxable income.

What is the Performing Artist Tax Parity Act, and why is it important for creatives?

The Performing Artist Tax Parity Act is a bill that aims to reinstate a tax deduction for performing artists who receive multiple W-2s but earn below a certain threshold. The law originally allowed performers to deduct work-related expenses directly on their tax returns without needing to itemize. However, this income cap was set in the 1970s and was never adjusted for inflation, making it practically useless today.

If updated, it would allow many creatives to deduct essential expenses like agent fees, audition travel, and professional development. Unfortunately, performers are not always a legislative priority, which has made it difficult to get this bill passed, even though it would be a relatively simple fix.

How did you transition from being a creative to becoming a tax professional?

My journey into tax work started out of necessity. About 10-12 years ago, I co-founded a theater company without knowing much about business or taxes. I had to teach myself bookkeeping, nonprofit management, and tax filing just to keep things running.

Over time, I became the go-to tax person for artist friends, so I decided to get certified. I became a California tax return preparer, then an Enrolled Agent (which allows me to represent clients in IRS audits), and most recently, I passed the tax bar, allowing me to practice in U.S. Tax Court.

Throughout this, I’ve continued working as an actor, magician, and writer. I understand firsthand the challenges of making a living as a creative while navigating complex tax issues.

What are some common tax misconceptions among artists?

There are several myths that artists often believe, including:

1. You need to form an LLC or S-Corp to deduct expenses – Not true! Many people rush to register an LLC, especially in California where it costs $800 annually, even if you never earn a dime. If you’re a freelancer, you can deduct business expenses without needing a formal entity.
2. You need to be making money to deduct expenses – Also false. The IRS has a five-year rule where three of those years should show a profit, but this only matters if you’re audited. If you’re legitimately working toward building a creative career, you can deduct business-related expenses even if you haven’t turned a profit yet.
3. If you don’t make money in three years, the IRS will shut down your business – This is a misinterpretation of the IRS’s hobby loss rule. The IRS looks at intent: If you are genuinely running a business and making efforts to profit, you are fine.
4. You can deduct everything – While you can deduct a lot, there are limits. For example, if you live with roommates, you can’t write off your entire rent just because you work from home. However, reasonable deductions—such as website costs, headshots, or audition travel—are perfectly legitimate.

What advice do you have for artists preparing for tax season?

• Know the difference between W-2 and 1099 income – W-2s are for employees, and expenses related to this work are not deductible. 1099 income (or cash/Venmo payments) counts as self-employment income, and you can deduct related business expenses.
• Take all legitimate deductions, but don’t push it – The IRS does audit people, but as long as you have receipts and can justify your deductions, you should be fine.
• Avoid tax scams – Some tax preparers promise huge refunds by filing false deductions, but that can lead to an audit years later, with penalties and fraud charges.
• Work with a tax professional who understands the arts – Not all accountants understand the unique financial lives of creatives. If you do your own taxes, educate yourself, or at least consult a knowledgeable professional.

Key Takeaways from the Episode

• Tax Relief for LA Fire Victims
  Extensions until October 15 and potential casualty loss deductions for affected individuals.
• Performing Artist Tax Parity Act
  A proposed bill to restore tax deductions for performers’ work expenses.
• Tax Myths for Artists
  You don’t need an LLC to deduct expenses, can claim losses, and won’t be shut down for being unprofitable.
• W-2 vs. 1099 Income – W-2 (employee) = no deductions; 1099 (freelance) = deductions allowed—track income properly.
• Avoid Tax Scams & Audits
  Work with trusted tax pros, keep receipts, and avoid inflated deduction promises.

Listen to this Episode on:

Spotify / Apple Podcasts / YouTube

Shenea Stiletto

Acrobat, Podcaster, Circus Artist, Handstand Instructor -United States

Shenea Stiletto (Shenea Booth) is a two-time World Champion Gold Medalist in Acrobatic gymnastics, a USA Gymnastics Hall of Fame Member, and World Acrobatic Society Inductee. Her career includes a decade of collaborations with Cirque Du Soleil including the coveted hand balancing role as "The Promise" in Varekai, becoming the first-ever African American female soloist to play a lead character in a Cirque Du Soleil production.
Shenea was also a finalist on America’s Got Talent and has continued to be a featured artist with prominent circus entertainment companies worldwide.

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