Life in Hollywood, below-the-line

Life in Hollywood, below-the-line
Work gloves at the end of the 2006/2007 television season (photo by Richard Blair)

Friday, March 11, 2011

Tax Time in Hollywood

"In this world nothing can be said to be certain but death and taxes.”

From a letter by Ben Franklin

Monday is the big lighting day on my show. With the new swing sets freshly constructed (but not yet fully painted), this is when we lay down the broad brush strokes using seniors and juniors -- 5000 and 2000 watt tungsten lamps. Depending on the size of each set, we'll hang anywhere from a dozen to three dozen lamps on the pipe grid, working from man lifts where we can, and ladders where we must. The endless tweaking required to smooth out the lighting -- adding numerous “specials” and accent lights, then fine-tuning everything (tilt-up/tilt-down, pan right/pan-left, add-a-double/pull-a-single...) will be done on Tuesday and Wednesday.

Monday is all about the heavy lifting.

So that’s where I was one recent Monday afternoon, up in my lift hanging 5Ks and 2Ks on the pipes, when loud voices erupted from the stage floor below. Vociferous conversation is not unusual once the director, actors, writers, and production personnel have left the set, but ours isn't a particularly boisterous crew -- and this ruckus was loud.

I finished tightening the pipe clamp bolt, then looked down to see the set lighting best boy locked in spirited debate with the best boy grip. A young grip stood between them, looking confused, his eyes darting from one to the other like a spectator at a tennis match.

Listening in (and given the volume of the discussion, it was impossible not to listen-in), I was surprised to hear it had nothing to do with the usual subjects of blue collar discourse – these two guys weren’t jawing about sports, women, or the latest wild-eyed antics of Hollywood's Bad Boy de jour, Charlie Sheen.

They were arguing about taxes.

Income taxes are a big deal in our society, for reasons both practical and ideological. Rich or poor, nobody likes to pay more than their fair share at this time of year, and if the rich enjoy a huge advantage here, it's because they've already bought and paid for enough politicians to keep it that way. Meanwhile, the rest of us -- the working classes -- do the best we can on this decidedly uneven playing field, scrambling for whatever tax-break crumbs the rich left on the table.

Our tax code is so absurdly huge and complicated due to a blizzard of exemptions and loopholes add down through the years. Tax payers who itemize their returns can usually find ways to claim all sorts of deductions, and those of us who grind out the film and television sausage here in Hollywood are no exception. If you work for a bank, repair cars, or unclog people’s toilets for a living, that brand new sixty inch flat screen TV hanging on your wall is probably not a deductible expense – but if you are among those who follow the Hollywood elephant, shovel in hand, it may well be. The same goes for movie tickets and the monthly cable TV bill -- the former falling under the heading “professional admissions,” while some portion of the latter can be classified as a legitimate work-related expense, since those who make television do have to stay current with the products of our industry. Dining and entertainment expenses with fellow work-bots (who might be able to offer employment somewhere down the line) are also candidates for deductions under the “business expense” provisions of the tax code, as are some percentage of cell phone and/or land-line telephone bills. In an industry where most of us are itinerant free-lance workers, documented mileage on the car to and from work can also qualify as a tax deduction.

It all gets very complicated in a hurry, and I claim no real expertise in this -- which is why I just throw all my receipts in a bag as the year unfolds, then spend a miserable day or three every spring collating those expenses before mailing the distilled data to a tax prep specialist whose job is to make sure my return takes advantage of every legitimate loophole. Once she’s done her work, I send her a check. In the end, I usually wind up getting back a healthy tax return while the Feds and state hang on to a considerably larger sum.

Such is modern life.

Almost everybody I know in the biz does something similar, each following a strategy tuned to their own comfort level. I'm not one to push my luck, but over the years have run into several fellow Industry work-bots who take pride in paying nearly nothing in taxes every year by adopting hyper-aggressive tax avoidance strategies – claiming every possible deduction while exploiting every potential loophole. Among these people was one of those “don’t tread on me” zealots, a self-described "patriot" who claimed that the government had no legal right to impose income taxes on U.S.citizens. I made the mistake of asking him about this once, an innocent question that sparked a twenty minute spittle-flecked harangue complete with long-winded quotes from the Constitution. Talking to him was like trying to have a rational discussion with some tri-polar homeless person long gone off his meds. Like many crazy people, he was very sure of himself, scrupulously following the advice of a famous anti-tax guru -- but eventually the Feds got tired of his antics and threw his ass in jail for a couple of years.*

The animated discussion on our stage turned out to be a tug-of-war over the tax-paying soul of that young grip. Still new to the biz, he planned to file a short-form 1040 with H&R Block this year. One best boy -- a fervent adherent of the save-every-receipt-and-claim-it-ALL school of tax preparation -- was doing his level best to talk that young man into seeing a tax specialist knowledgeable in the the ways of the Industry. The other best boy maintained that until the kid stopped renting and bought a house, itemizing his tax return wouldn't be worth the trouble and expense.

I had no idea who was right, but since the only thing I hate more than talking about taxes is actually doing the necessary-but-odious paperwork, I tuned them out and went back to work.

I don't mind paying my fair share at tax time. Modern life in a First World society doesn't come cheap, and those who enjoy the benefits have an obligation to share in the burden. As Justice Oliver Wendell Holmes famously noted, "Taxes are the price we pay for civilization." He was right about that, but until our tax code is revised to the point where it's fair and simple, I'll continue to play the game, however reluctantly. What drives me up and over the wall isn't paying the taxes, but the unbearably tedious process of collating and itemizing all those receipts -- an exercise in mindless concentration that always makes me feel like I'm choking.

So that's what I'll be doing on this lovely Spring weekend -- drowning in a small ocean of receipts. I'm certainly not alone in this purgatory of paperwork, though, with most of Hollywood (and beyond) doing the same thing.

April 15 looms just a month away, and the tax clock is ticking...

* I wonder if he pays his taxes now...


A.J. said...

If it makes you feel any better, this year's deadline actually falls on the 18th due to a holiday. That leaves us with three extra days to play the "Does this count as a write off?" game!

hazel motes said...

Like you michael, i chuck it all in a box and go thru it at the end of january. every year, usually after a double shot of expresso, i'm determined to improve my system so that i don't have to sort thru all years crap in one painful sitting. i've dabbled with various expense tracking software (free ones or demos) but always find them too complicated for my simple needs. lot's o accounting speak that is greek to me. one strategy i've understaken is to make most of my purchases with a credit card thereby having a nice itemized list at end of year. i've heard the cc statements are not acceptable as receipts but this was a long time ago and i just can't stand receipts and restaurant stubs and all that crap. so i guess i'm takin my chances but i figure as long as i have SOME kinda record i'm going to be ok. also, i'm rather conservative when it comes to deductions and all that. don't want the irs takin an interest in me.
i too have from time to time encounter those types who claim income tax is illegal. and i have to say the arguments can be pretty compelling...but so can jail time.

another well penned piece that both informed and entertained. thanks.

Penny said...

Oof. Welcome to my weekend Mike.

It dawned on me over hiatus that I never received my CPA's worksheets (usually promptly mailed out at the end of January in cheery colorful envelopes), and when I called the office, discovered that I was one of three people who got lost in a computer glitch. (Really?)

Got my paperwork Saturday, and by the time I added all up my minimal expenses for deductions the post office was closed, leaving me the only option of mailing my crap OVERNIGHT this Monday to the accountant, which must be received by MARCH 15 unless I choose to spend another $135 on top of the mail-in fee of $230 for an actual sit-down appointment...

In the words of Charlie Brown, "AARGHH!"

But if I may contribute one more thing to your post Mike, according to my painfully anal CPA regarding business mileage - "It does not include commuting (going to and from a paying job) for any profession, except in rare cases such as temporary assignment outside the normal commuting range."

Hmm. I guess Laurel Canyon is out of the question...

Claiming zero business mileage, and racing to the post office first thing in the morning!


Michael Taylor said...

AJ --

It's an ugly game, but we don't have much choice, do we?

Hazel --

I hadn't heard about cc statements being insufficient proof of deductible expenses, but I think the key is not being too aggressive in going for the maximum possible tax return. The government will get its pound of flesh one way or another, so let 'em have their share without a big fight. It's the guys who claim 99 exemptions on their W-4, then try to write off every Big Mac and Supersized Fries as a business expense who get nailed. Those who blend in with the tax-paying herd are a lot less likely to get picked off by those sharp-toothed IRS predators...

Penny --

My understanding is that it all depends on the nature of your occupation. If you're a strictly time-card employee, then mileage is not considered a deductible expense. But many of us on the grip/electric side of the biz do free-lance film and television jobs in other capacities -- jobs that pay often on an invoice basis rather than via a time card. Some of us have equipment we rent to those productions, which is considered a business - and expenses incurred in running a business are, ahem, "business expenses."

In those cases, mileage counts.

It's a muddled gray world leading up to April 15, which is why accountants do so very well at this time of year...