More On Tax Planningfrom The Advisor's Professional Library
- IRAs: In General Individual Retirement Accounts are highly popular tools for contributing funds that grow on a tax deferred basis. Depending on the type of IRA, the accumulation can be tax free.
- Long Term Care Insurance: Premiums While premiums for qualified long-term-care insurance may be deductible as medical expenses there are exceptions to this general rule. Learn how to avoid unnecessary tax liabilities.
Miata Edoga’s wake-up call to the realities of proper financial planning came on a morning just like any other.
The actress, who some years ago worked the morning shift at a restaurant in L.A., had expected to be let off as she always was at 10 a.m., with enough time to spare for a 12.30 p.m. matinee call at L.A.’s Civic Light Opera, where she had a role in a production of “Annie.”
But that morning, her replacement did not show up.
“The restaurant was full and my manager refused to let me go,” Edoga recalls. “There I was, serving people with tears streaming down my face, and the manager said if I left, I would be stealing because I wouldn’t have closed my register. The only choice I had was to take all the money I’d made for the day and dump it on the table, but I had no idea how much there was and whether there was even enough to put gas in my car."
Although Edoga made it to the theater 10 minutes before curtain call, the experience was a slap in the face.
“I realized that I had very nearly not showed up for a performance of what I do best, acting, because I was so financially out of control,” she says. “So I set about to learn everything I could learn about money.”
From that moment on, Edoga read whatever she could lay her hands on and attended every free financial planning class she encountered. She tackled her debt and within a span of three years, had paid it off.
Then, armed with newfound knowledge and confidence, Edoga founded Abundance Bound, a company that specializes in financial literacy and education specifically for the artistic and creative community.
Today, Abundance Bound caters to a host of different artists that run the gamut from actors and musicians to jugglers and fire-eaters. Edoga has also served as the financial wellness counselor for the Actors’ Fund in New York and the Tisch School of the Arts has invited her a few times to speak about financial planning and wellness to students.
“Most artists believe they don’t need to know about money, but actually, artists, more than anyone else, need to know how to plan for the future and how to handle the financial peaks and valleys that we encounter in our profession,” she says.
That’s why the first and most important part of Edoga’s nine-step financial education and wellness program is 'mindset,' since getting an artist to buy into the idea that financial planning applies to them is a huge challenge.
“Artists have got to stop pretending that we can’t deal with finances,” she says. “What I want artists to recognize is that we can be better artists if we pursue our passion from a place of financial stability and strength. Because I’m now financially secure, I think I’m a better artist than I was. I audition with far less desperation than when I was thinking every moment about things like ‘if I book the part, then I could maybe pay off my Visa bill,’ so I really focus on the mindset and getting people to realize that [art and financial planning] are inextricably connected and I don’t think we can separate our ‘artist self’ and our ‘money self.’”
Artists have to realize that what they’re doing is a business and the more organized they are about that business, the less worried they’ll be and the more they’ll be able to perform their best, agrees Todd Thurston, a New York-based actor and founder of a tax preparation practice that caters toward artists in the performing arts ).
Like Edoga, Thurston, too, spent many years juggling auditions and acting roles with bartending and catering to pay the bills. One day while on the subway enroute to a catering gig, Thurston spotted an ad for H&R Block.
“I’d always done my own taxes,” he says, “so it wasn’t too difficult for me to complete H&R Block’s tax class.”
Thurston spent a number of years working for that company during tax season before eventually branching out on his own, and today, he serves a mix of actors, directors, dancers and musicians.
“I like to get artists right off the bus, so to speak, people who may have had their first show and start to make money and don’t know what to do,” he says. “I show them how they can get their finances organized and reduce their taxes.”
Besides being finance and numbers-averse, many artists don’t also know that there’s a host of financial planning resources available to them. Taxation is a particularly tricky area, Thurston says, but the best thing about being an actor or a performer is that “most of your job is looking for work and according to the IRS, looking for work – pictures, resume, transportation to jobs and so on – can all be folded into your job search as a way of improving your skills in your profession, and that’s deductible,” he says. “A lot of artists, musicians and dancers get freelance income, so it’s even more important to get expenses organized and get proper tax planning advice.”
But Thurston, like Edoga, believes that the most important aspect of his career as a tax planner has to do with his own lifestyle and the fact that being financially secure helps him be a better performer.
“Although I tell my agent I can’t take a job between February and April because I can’t be in rehearsal, I have been on tours during tax season, and with the Internet, I can do both my jobs,” he says.