Is Actor. a Qualified Business Income?

[grayjaime]

My brother is an actor and does small acting jobs. Some he gets paid with W-2's, and some with 1099 NEC. He doesn't have his own company yet. Does this qualify for NEC? 

Also, he does work such as filming auditions from his apartment he pays rent for. Can he put it down a home office space use?

[Bsch4477]

Athletes and performing artists are included in a category of specified services trades or businesses (SSTB) that are ineligible for the QBI deduction.

Qualifications for a home office include using the space exclusively and regularly for business. Watching TV or doing any other non business activity in that space excludes it from that deduction. 

[grayjaime]

Thank you!

[Mike9241]

Yes an actor would fall under the SSTB rules but they can get a full QBI  deduction for their net self-employment income if their taxable income for 2022 is less than - Joint return $340,100, $170,050 for any other filing status.  there is a total phaseouut  at $440,100 Joint, $220,050 any other filing status 

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this assumes he's falls under the definition of SSTB reg 1.199A-5

(vi) Meaning of services performed in the field of performing arts. For purposes of section 199A(d)(2) and paragraph (b)(1)(v) of this section only, the performance of services in the field of the performing  means the performance of services by individuals who participate in the creation of performing arts, such as actors, singers, musicians, entertainers, directors, and similar professionals performing services in their capacity as such. The performance of services in the field of performing arts does not include the provision of services that do not require skills unique to the creation of performing arts, such as the maintenance and operation of equipment or facilities for use in the performing arts. Similarly, the performance of services in the field of the performing arts does not include the provision of services by persons who broadcast or otherwise disseminate video or audio of performing arts to the public.

notice the word professional above if he's not then his activities may not fall under the SSTB rules

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the reg also contains another exception that bars certain income from being QBI

Example 5. A, a singer and songwriter, writes and records a song. A is paid a mechanical royalty when the song is licensed or streamed. A is also paid a performance royalty when the recorded song is played publicly. A is engaged in the performance of services in an SSTB in the field of performing arts within the meaning of section 199A(d)(2) or paragraphs (b)(1)(v) and (b)(2)(vi) of this section. The royalties that A receives for the song are not eligible for a deduction under section 199A.

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