New year, new faces, new fun. That’s what we always look forward to whenever a new year comes around as professional makeup artists. However, it’s not all fluffy clouds, happy beauties, and all that good stuff. As a sole proprietor, as most of you are as MUAs, there’s a depressing reality at the beginning of every year, and that comes in the form of filing taxes. Yes, as US citizens, we have to file taxes every year anyways, but as entrepreneurs as well, I know that filling out the Schedule C is not the fun part of the makeup business.
However, the silver lining is that with these tax deductions, that means that we are fighting to retain every hard-earned penny we made from doing what we love. And that’s important, because money made with passion is the most prized form of monetary income, so I want to help you guys protect as much of that as possible.
With that said, I wanted to share with you some tax deduction tips that I believe every makeup artist should be recording on their tax returns. This is not a comprehensive list by any means, because there are trobes of potential tax write-offs (Google “self-employed tax write offs” or “self-employed tax deductions”) when you are self-employed. These are just particular inclusions that I feel are most relevant to MUAs:
DISCLAIMER – we are not CPAs, or tax professionals. These are tips that we have picked up and learned, and we are merely just sharing them with you to aid you. You should ALWAYS do due diligence when it comes to information on the Internet.
1) Mileage – it’s $0.56 / mile deduction driven for business for 2014 per the IRS website. For those of you who have never recorded your mileage for makeup jobs, you are leaving money on the table! I know that doing this becomes a bit of a hassle for a few miles here and there, but believe me, it’s worth it! The last 2 years, I recorded all the miles I’ve driven, and I can tell you that when I look back, I am amazed at how much it adds up. Just get a notebook, or use an app on your phone, and record the mileage to the destination, and the mileage back. Record a short description for each entry, and the date, and car (if you have multiple cars), and you are done!
To take full advantage of this, business mileage applies to the mileage you drive to purchase supplies for you makeup kit for jobs, meeting clients, photoshoots, makeup conventions, makeup classes, going to the airport for off-site jobs, etc.
2) Education – as MUAs, we are constantly striving to grow and refine our skill sets to keep our techniques fresh, efficient, and in high-demand. Continuing education is a great tax write-off to tax advantage of. We spend a significant amount of time attending online makeup classes, seminars, conventions, and makeup publications. Just make sure you keep all your receipts.
NOTE: if you had to travel for your education, make sure you obtain receipts for your rental car, hotels, plane tickets, luggage fees, tolls, parking, etc. Those are all write-offs to go along with your education.
3) Independent Contractors – many times, we work in conjunction with other MUAs on makeup jobs. In those cases, clients pay you directly the entire sum, and you would need to pay the other MUAs individually for their work that they helped you with on the job. They don’t work for you (we are NOT talking about employees as that is an entirely different conversation), but since you had to pay them out via your business account, you should get your write-offs for it. To do it properly, you will need to obtain Form 1099-MISC for each independent contractor that you paid in excess of $600 total in that tax year. Follow the IRS guidelines in filing a copy of the Form 1099-MISC with them, as well as mailing your contractor copies for their tax reporting use also. Once that’s done, write it off!
4) Pro Card Discounts – if you haven’t already, you should be applying for pro cards for every cosmetics supplier under the sun. Some of them are paid annually, and if that’s the case, get the receipt and write it off as professional “dues & subscriptions”.
NOTE: some will require you to prove your cosmo license or makeup certification, so make sure you have that ready to show.
5) Networking – if you are self-employed, networking is one of the best ways to obtain referrals and clients. As a result, you will need to join networking associations, attend funcitons, and even go have coffee/food with networkers to establish referrals. These are all write-offs, and again, keep your receipts.
NOTE: meeting for coffee/lunch/dinner/food is considered “meals and entertainment”, in which case, make sure you (or your program that you use) deducts only 50% of that write-off, because that’s all the IRS usually allows. Also, this is not an excuse to have a $300 tasting menu dinner at a 4-star restaurant just because you were “entertaining”. Exorbitant write-offs are usually red flags, so don’t go overboard.
6) Home Studio Deductions – as a freelancer, you most likely have a studio in your home. In order to effectively write this off as a tax deduction, you must figure out the square footage of your studio space in relation to your entire floor plan total footage, and take that percentage as your deduction. The same can be applied to your electrical and water bill write-offs, and any additional maintenance expenses.
My super precaution is that you tread VERY carefully when you do this. First, that studio space must be 100% used for business only. No personal use or personal use items/products can be shared in that same space. Secondly, home office deductions are one of the highest red flag indicators that the IRS looks for in “audit potential”, because the rule itself relies on sole interpretation by you. Think about it: how else do you “prove” that a space is 100% used for business unless the IRS physically comes to your house to check the space?
For us, we personally recommend getting an app to be your expense tracker first and foremost. We use a program called Deductr, but there are others out there. In finding an app, I suggest you look for one that does both expense tracking AND mileage tracking, and make sure that the expensing app updates their tax deduction percentages (mileage deduction rate and meals/entertainment rate) frequently.
Also, make sure you keep up with current tax break news, so you maximize your returns. There are a multitude of resources, but I’ve found that Kiplinger’s tax section is a great resource to start with.
Got any additional tax tips for makeup / beauty professionals? Leave a comment.