October 25, 2022

Are You Making These Simple Mistakes in Film Tax Credit Acquisition?

While it is undoubtedly possible to produce a film on a budget or even zero budget, most films require funding. Paying cast and crew, renting cameras, lighting, and sound equipment, securing venues, booking costumes and props, and, most importantly, feeding everyone on set are all necessary. All of these costs add up dramatically. 

Whatever the scale of your production, being aware of frequent Film Tax Credit errors and how to avoid them is essential.

What Are Film Tax Credits?

A film tax credit is a sort of incentive provided by various states to help offset the cost of film production.

Credits are often granted in return for employing domestic workers and utilizing local resources, which may be an efficient approach to promote regional economic growth.

Film tax credits have been in use since 1918 when they were developed to improve job prospects in California’s ailing economy during World War I.

Common Film Tax Filing Errors You Can Avoid

To qualify, you must be an individual who is not principally involved in the film production industry or a corporation that does not dedicate more than 95% of its assets to film production.

You must also participate in eligible production activities at some point during your taxable year.

Keep up with the latest news

Keeping up with tax law changes is especially crucial as you prepare to file your film tax return. The states make regular adjustments to tax laws and regulations. Understanding the shifting rates and regulations of film tax credits will make your tax return procedure a lot smoother.

Check your eligibility according to your state

Individuals are prone to making errors while claiming film tax deductions and/or film tax credits. Due to state regulations and rates, eligibility for many film tax credits can be tricky, and many jurisdictions have numerous criteria for film tax credit as well.

Get the data right

The most common problem with tax returns is math mistakes, but data may be recorded incorrectly even before you start subtracting, adding, and dividing.

Use the numbers exactly as they appear on your film tax credits or other tax forms. Don’t round up or down.

Don’t be late

Maybe you’re a natural procrastinator, or maybe you really despise doing your taxes so much that you put it off. The next thing you know, it’s deadline day, and you haven’t even begun your return.

A film tax credit could be a great method to offset the expense of your film. While the procedure is selective, once you’ve been approved for a tax credit, you may write it off safely and save money.