Can I deduct the cost of making a movie for my film making graduate school class?

[MichaelMc · Accepted solution]

Yes, some of the costs of making a movie for your graduate film-making course may be deducible as qualified education expenses, if the movie is a course requirement.

While there are two education credits generally available, as a graduate student, only the Lifetime Learning Credit would apply.

Please note that to claim books, equipment, and materials as qualified expenses under the Lifetime Learning Credit, you will need to have purchased them directly from the school.

To enter these education expenses in TurboTax:

1. Type Education Expenses in the Search Topics box and click enter.
2. Click Education Expenses / Credits and begin the interview.
3. Continue through the screens answering questions about the student, the school, and the education expenses. You will encounter a screen where you may enter Books and Materials. The equipment and materials that you purchased may be entered there.

[Hanselndracula4]

How about for an undergraduate school class where making a film is required for the course?  Can I deduct these following expenses: equipment rental, U-Haul truck rental, food for crew, gasoline for crew cars & truck?

These are legit expenses that were required to fund my film project and I had to pay them out of my own pocket.  

[Hal_Al]

Qualified expenses, for the American Opportunity Credit:  "Tuition, required enrollment fees, and course materials that the student needs for a course of study whether or not the materials are bought at the educational institution as a condition of enrollment or attendance" (Pub 970)

[Hanselndracula4]

So are you saying that the expenses I listed above qualify as "course materials" since I had to fund those expenses in order to produce my film that was a mandatory project for the class?

[KrisD15]

Yes, but you would need to be able to justify the expenses as being required. 

I would not add the food charges, that seems like a gratuity on your part, unless providing food was part of a contract. 

According to the IRS:

“However, expenses for books, supplies, and equipment needed for a course of study are included in qualified education expenses…”

Pub 970

[Hanselndracula4]

Providing the food and crew & equipment transportation was absolutely part of the contract; it is a standard requirement of a film production. 

I would have also been required to

1) pay for rental cars for the crew - luckily several crew members volunteered their own cars and waived mileage reimbursement.  So I only had to pay for gas for 2 crew cars (too many crew to fit in one car).   

2) pay for the crew's room & board since the film shoot location was in another town from our school but I was able to work a deal with the shoot location owner to also let us stay on the property rather than having to stay at nearby hotels. 

3) pay for the entire crew to get COVID tested - thankfully that was free-of-charge due to government mandate at that time.

Those major "freebies" saved me a huge chunk of change.  

[KrisD15]

Good, if those are "Ordinary and Necessary" expenses to make a film

and making a film was a requirement of your class, 

The expenses would be "Education Expenses" and entered in the Education Section of TurboTax under Deductions & Credits. 

They wouldn't be "Deductions", but could be used to claim an education credit, or offset an education savings distribution or scholarship. 

Be sure to keep receipts (and a copy of the class assignment if possible) with your tax file. 

[Hanselndracula4]

Got it - thanks!  I have copies of the script, the call sheets, the budget, the driving schedule, the food plan, the cast and crew list, the shoot schedule, the location map and the expense receipts.

[lance money]

Hi!

I'm in the same boat -- just completed my thesis film in 2023 and wanted to know if you were able to write off all your expenses? Things like food for crew, props/wardrobe, equipment rentals were all a lot of spending, and also falls under the requirements of my class course, and ultimately the requirements of my university to graduate. Was there anything specific that I might need to include when writing these things off?

Thanks!

[AbrahamT]

You would itemize each of the items and decide for yourself if it was a course related supply or equipment. See HERE pg. 12 and 24. Under the guidelines outlined there, you would fulfill your requirements both under the American Opportunity Credit and the Lifetime Learning Credit requirement with the only difference being that under the AOTC, you don't necessarily have to purchase the materials from the institution whereas under the LLC , you would have to.  

[mr_mango]

Great information - I've been hunting all over trying to find answers to this topic. In my case, my daughter is a film student, Senior year, and is beginning production on her Senior Thesis film - her final requirement to graduate. I'm trying to figure out if she can use funds from the 529 plan I set up for her to pay for those film production expenses (crew, transportation, actors) without incurring the 10% penalty. Is that what you mean by "offset an education savings distribution"?

[AbrahamT]

Yes, she can.

Anything that is required to complete her coursework. In her case, since this film is her final requirement to graduate, then everything that is necessary to fulfill those film production requirements would be fair game to qualify to use those funds.

In your daughter's case, because the film production expenses are necessary to complete the Senior Thesis film, which

is final requirement to graduate, then it'd fall under the guidelines of requirements to complete her coursework and thus she'd be can take funds from her 529 Savings account to pay for those expenses.

In answering the question of "offseting an education savings distribution," should be adressed to   KrisD15

[mr_mango]

Can you elaborate on your comment that the film production expenses could be used to  “offset an education savings distribution or scholarship.”? I’m trying to understand the use of 529 plan funds to pay for production expenses for my daughter’s Senior Thesis film - something I had dismissed previously as unqualified.

[Hal_Al]

It's a gray area whether these types of expenses qualify as educational expenses, for tax breaks.

They do not qualify for the Lifetime Learning credit.

They do not qualify for the savings bond interest exclusion.

In order to qualify for the the American Opportunity Credit (AOC), tax free scholarship or a Qualified Tuition Plan (QTP) (529 plan or ESA) distribution, the expenses would have to qualify as "course materials that the student needs for a course of study."  The wording for course materials for the QTP distribution is the loosest. That is, the cost of a student film project would more likely qualify for a QTP distribution than it would for the AOC.