Performing artists move around a lot, and keeping track of where my clients actually are takes a surprising amount of effort. Roommates change, relationships begin or end, parts get cast in out-of-town productions, and there’s always the lure of LA and pilot season. Inevitably, they want to know whether they can deduct the cost of getting to or being there, or preferably both. Many factors are involved beyond the obvious differences between, say, Wicker Park and New Zealand.

Is It Permanent?

The first question is whether you have moved or are traveling, because the rules differ greatly. Simply (but inexactly) put, “moving” means you went somewhere without intending to come back, while “traveling” means that you plan to return. And the “why” question is always involved, implicitly if not explicitly.

Moving your residence is not a business expense, and as a personal expense the cost would not ordinarily be deductible. That is the case if you move to the apartment across the hall, or a new address across town. But Americans often move out of town to take a new job, either because they want to or because they must. In those circumstances, the cost of moving is deductible. It is one of those special deductions that apply regardless of whether you itemize, or are self-employed, or have no other deductions at all.

“Out of town” is a difficult concept to define, and the moving expense rules do not try. You merely must move at least 50 miles closer to your new job, which in theory you could do within the metropolitan areas of Chicago or LA. The other rules are also pretty straightforward: You can deduct the cost of getting your stuff and yourself from one location to the other, and nothing else. No preliminary trips, no real estate transaction costs, no meals en route—all of which were once deductible as moving expenses.

You need not have work lined up before you leave, but you do eventually have to work a reasonable amount of time in the new location for the deduction to be valid, generally 39 weeks in the first year. This provision was put into the law, according to the Congressional committee report, to prevent people from retiring to Florida and Arizona, and taking a job for a week or two to deduct their moving expenses. To that end, the rule has an important exception, which is that it doesn’t apply if you’re laid off from work you thought would meet the rule. And you can meet the requirement with any combination of jobs, such as “on camera” and “Borders.”

Being a Temp

Traveling temporarily away from home for business is a deductible expense. That sounds simple. But there are three important concepts in that sentence: “temporarily,” “away from home,” and “business.” Each of them requires consideration and exploration.

Temporary jobs sometimes turn into permanent ones, as may out-of-town assignments. Other people (whose work schedules and finances allow) may choose to live some place more salubrious than where they work. The Internal Revenue Service (IRS) takes the position that you can’t be temporarily away from home for more than a year for a single assignment at a single location. After that, you are treated as living where you work when it comes to travel expenses.

“Away from home” has some other subtleties. In one sense, I’m away from home sitting in my office, even though the distance is only 10 blocks. But for tax purposes it means out of town, and the definition used is an overnight stay or a trip long enough to require the equivalent rest. As a result, Milwaukee may or may not be out of town, depending on whether you commute or stay over. That is not as absurd as it might seem because one of the key concepts is that traveling causes duplicated expenses, e.g., your apartment here and a hotel there. You don’t have to bear the cost of the duplication—your employer can pay it or you can crash on a friend’s futon—but it must exist. When you’re going on tour, resist the temptation to give up your apartment and put everything in storage. Otherwise, you could be deemed to have moved, and to move again each time the tour goes to another city. If that happens, you have neither a travel expense deduction nor a moving expense deduction. That’s ugly.

Travel is, of course, something we do both for fun and for work. While only business travel is deductible, many trips have elements of both. The rules are surprisingly generous here, perhaps reflecting the impracticality of being more precise. If a trip within the United States is primarily for business, the whole cost is deductible; if not, the expenses must be divided, usually based on time. So the idea of scheduling a single audition in the middle of a long vacation is, as they say in England, a nonstarter. Foreign travel requires allocation between personal and business, with some exceptions for brief trips and those you don’t control.

Deductions for business travel are somewhat broader than for moving expenses. The cost of getting from here to there, lodging, and getting around while in the other city are obvious. You’re not limited to a single round-trip; you can deduct the cost of coming home on your days off. Out-of-town meals are also deductible, and the IRS publishes a table of daily rates for many cities. These rates currently range from $31 to $51 per day within the U.S. (more, sometimes much more for foreign cities), and may be used instead of your actual costs. This is one of my favorite rules, because it both simplifies your record keeping and can allow you to deduct more money than you actually spend.

Just Ask for It.

My “Checklist of Potentially Deductible Items” for those in the performing arts is available to anyone who asks. Just call, write or e-mail me, and we’ll be happy to send one out to you.

Are there money or tax questions you would like to see discussed in this column? Let me know, at 2835 N. Sheffield, Suite 311, Chicago, IL 60657, or call 773/525-1778 (888/525-1778 toll-free outside the Chicago area) or e-mail greg@gregmermel.com.
Greg Mermel is a certified public accountant whose clients in the arts range from individual performers to major theatre companies and suppliers. He also has been known to produce theatre.

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