Talent agency filing taxes from money made on a movie, but W2 was given to client?

[azhiajanay]

Hi all - We are a small talent agency and our clients have gotten booked on a number of movies this year. The check was addressed to both us and the client. We cash the check, and expense out the client their part, and keep our agency fee. 

The W2 goes to the client of course, but we send out the 1099 to the client that we expense out to them. Is this the correct way to do it? We feel like we are missing something b/c the client's W2 would say they made $12,000 for instance but in actuality they only made $10,000 because $2,000 is for management. But then we send out a 1099 for $10,000? 

Any advice would be greatly appreciate!

[VolvoGirl]

So who issues the W2?

[azhiajanay]

The production company of the movie.

[TomYoung]

I can't understand why an actor would get a W-2 in the first place.  I'd think they would always be independent contractors: they're hired for a specific project and understand that when the project's over the money stops, and the actor determines how they're going to do what they do.

[Critter]

If the payer is treating them as an employee and withholding the FICA taxes then they would file a W-2.  But if there were no taxes withheld then they are not employees as you said ... so in that case the payer should be sending out 1099-misc forms ... but will they send only 1 to you or 1 to the client  or one to each of you ... that is the question that needs to be answered.

[azhiajanay]

It's a unionized project through sag aftra, thats just how it is for the larger productions

[azhiajanay]

They are treated as an employee and FICA taxes are taken out.

[azhiajanay]

We fill out a check authorization form so that we can cash the check on their behalf so we are the middle man so we can get our portion before the client gets it. Our largest concern is that we may deposit $12,000 but we only keep $2,000 just wondering if we need to make a paper trail with the tax forms? So Critter#2 should the client be sending us a 1099? How do we show the monies we received?

[Critter]

If the payer is not sending a W-2 then the next question is who are they sending what form ?   Again once you know the answer to that we can tell you what to do next.

[Critter]

Ok .. so if the client gets a W-2 then my original answer stands.

[azhiajanay]

You are correct, the client received the W-2. So we do not need any forms to report the income we received from the client?

[Critter]

Nope but an invoice for the fees would be a good paper trail for both parties.

[Critter]

No ... you send no tax reporting forms at all ... at best you can send an invoice for the fee they paid you.  Then the client will enter the entire W-2 income on their return and expense your fee on line 24 of the form 1040 ... read the instructions here for that line ...https://www.irs.gov/pub/irs-pdf/i1040gi.pdf  and here on page 4 : https://www.irs.gov/pub/irs-pdf/i2106.pdf

[azhiajanay]

Thank you so much! This was very helpful. So basically we don't have to report the income we received because the client should be reporting that expense?

[debi222]

Hi - I am helping with the accounting for a small talent agency that started up this year.  I had the exact same question you originally posted.  I just want to make sure I understood the correct answer.  To clarify:

The talent is going to receive a W2 because Production removed taxes, then we receive the payment made to talent (care of agency), deposit check then write a check to talent for the net (their fee less our commission).   Then we do NOT need to send the talent a 1099 since they are already getting a W2 from the Production company?