Film productions include large and small productions. Film companies may produce short films, feature films, TV shows, commercials, or training videos.
Like all businesses, film production companies must file taxes. Production companies can reduce their taxable income by claiming valid deductions when filing their taxes, which is why these companies must understand what expenses are tax-deductible. Let’s take a closer look at tax-deductible expenses for film production companies and some tips production companies can use to track those expenses.
You can claim film production expenses when you file your taxes.
Tax laws change, making it challenging for people who don’t deal with taxes full-time to stay on top of tax-deductible expenses. Fortunately, filmmakers can claim all costs associated with producing a film, provided they claim the deductions during the first year the film’s released.
Suppose you opt to film some scenes in a film studio. You pay for a video studio rental in NYC and use the studio to shoot indoor scenes with set pieces or green screens. You may add equipment rentals to your studio rental, so you don’t have to worry about transporting lights, sound equipment, and production equipment to the studio. You can also rent folding chairs, garbage cans, tents, fans, fog machines, tables, and tools, such as drills and saws. You can deduct all of these rental costs when you file your taxes.
Film production costs also include the cost of research. You can deduct the cost of purchasing reference books to inform your script or set designs. You can also deduct costs incurred while attending cultural events for research purposes. Travel expenses incurred while you’re scouting for film locations or traveling to different locations are also tax-deductible.
There are some miscellaneous costs filmmakers can claim on their taxes.
Filmmakers can claim the cost of tax preparation services when filing their taxes. This means if you opt to hire an accountant or purchase tax software, you can claim those expenses. You can also claim the cost of tax materials, such as tax folders, binders, and tax envelopes.
You can claim the cost of organization memberships, legal fees, and promotional costs. You can deduct the costs of hiring a search engine optimization (SEO) marketing team to promote your film and having another marketing team create movie trailers and advertisements. You can also claim the cost of paying for air time for your ads.
Use appropriate resources to track and deduct expenses.
Filmmakers can claim multiple expenses, making it a good idea to invest in tax folders. Custom folders can display your business name on the cover. Using custom tax return folders makes it easy to keep track of essential documents. You may have hundreds of receipts and benefit from using several folders to maintain records of your deductible expenses.
You can also use tax envelopes to store receipts and put the envelopes in your folder’s pocket. Tax envelopes are compatible with tax software programs, enabling you to print a sheet with the sender’s and recipient’s addresses and have those addresses appear in the address windows.
You may also order business checks and pay by check to simplify the process of tracking your expenses. Whether you pay with a check or a credit card, avoiding cash expenses ensures you have records of all transactions because you’ll have bank or credit card statements you can reference if you misplace a receipt.
Hiring an accountant ensures you have an experienced, licensed tax expert preparing and filing your tax returns. You can be confident you’ve claimed all valid expenses. If you don’t hire an accountant, you should invest in tax software and spend time reviewing the IRS guidelines to ensure you don’t overlook expenses you can claim.
Any expenses incurred while making a film are tax-deductible. Using tax folders and envelopes can help you keep track of receipts. Filmmakers should hire an accountant or use tax software to prepare their tax returns.