Let's say you make 200K on your script...

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  • Let's say you make 200K on your script...

    what do you walk away with after taxes, agent fees, manager fees, etc?


  • #2
    Re: Let's say you make 200K on your script...

    Let's say 25 % of the gross for assorted fees.

    50 % of what's left.

    $ 75 K

    Or not.
    If you really like it you can have the rights
    It could make a million for you overnight

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    • #3
      Re: Let's say you make 200K on your script...

      The highest tax bracket is around 40%, so you should walk with 60% or 2/3s of the total. So I'd say --

      200k
      -50k for agent/manager/lawyer
      ----
      150k take home, taxed at 33%
      x.33
      ----
      $100k

      Plus that $100k is essentially 1099 income, which means you can incorporate. Which means that you take home the $150k and then look for every reason to deduct business expenses (your car lease, your office, your cable, your Netflix subscription, your paper, your computer, your mileage), etc, etc.

      Working writers should have good accountants that will make the $ go much further than, say, if you were receiving a traditional paycheck.

      In other words, that $150k you take home is a much better $150k than making that as a lawyer where you're receiving a salary.
      Reaction time is a factor, so please pay attention.

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      • #4
        Re: Let's say you make 200K on your script...

        state and federal?
        If you really like it you can have the rights
        It could make a million for you overnight

        Comment


        • #5
          Re: Let's say you make 200K on your script...

          Originally posted by Han Shot First View Post


          In other words, that $150k you take home is a much better $150k than making that as a lawyer where you're receiving a salary.
          I doubt it. You're taxed on the gross. Commissions are deductions, but you're technically being taxed for 100% of the salary you only receive 73.5% of. (no one ever throws in the 1.5% to the WGA, but believe me, those dues add up).


          When all is said and done, it's too depressing to think about.

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          • #6
            Re: Let's say you make 200K on your script...

            Originally posted by BestWriterEver
            200 - agent - manager - lawyer - guild =147

            fed max rate = 35%
            california max rate = 10%
            - medicare, social security, etc, etc...

            around 70k.

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            • #7
              Re: Let's say you make 200K on your script...

              Losing over 50% of the quoted value...

              Sucks, don't it...?
              -- Another Writer

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              • #8
                Re: Let's say you make 200K on your script...

                This is wrong. You're taxed on your TAXABLE INCOME, which the self-employed reduce by deducting expenses such as car, office, paper, computers against. So if you have $200k of total income and you have $50k of deductions for fees and you can prove $50k of expenses, (car, office, blah blah) you are taxed on $100k, which goes into the formula.

                Our tax rates are "progressive," so you will only get taxed the maximum amount on the dollars in that high bracket. So if the top bracket is 35% for income over $200k, you don't get taxed 35% on ALL your income, just the amount over $200k.

                Total tax (federal, state, social security, etc.) for most people will be about 1/3 or less of their TAXABLE income.

                I still say a writer with a good accountant will take home around $100k on their sale of $200k. Still pretty good.
                Reaction time is a factor, so please pay attention.

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                • #9
                  Re: Let's say you make 200K on your script...

                  We can go back and forth on this. I have a good accountant. I write everything off possible. I'm incorporated. I'm not netting 50% of my gross income after commissions and taxes. That's just my experience. I'd love to hear who's doing better so I can poach their tax guy.

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                  • #10
                    Re: Let's say you make 200K on your script...

                    Fair enough. It sounds like it's not too far south of 50%. But my point was mainly that the (after fee) income you make as a writer should be "better" income than you'd make as a salaried employee because you can deduct more against it.

                    Still, taking home $80-$90k on $200k isn't terrible as that's a pretty low-end deal and you're still taking home the equivalent of ~$7,000/month.

                    The trick is putting together more than one of those in a calendar year.
                    Reaction time is a factor, so please pay attention.

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                    • #11
                      Re: Let's say you make 200K on your script...

                      I'm no expert at this, but doesn't writing off the tax for expenses only apply if you set up your own company whereby you're the only employee? You, say, pay yourself -- the sole employee -- a lower salary to ensure you're paying a lower tax bracket, and the rest of the "untaxable" money goes under the "company" name.

                      So, any purchases required to operate as a writer -- hotels, car, gas, paper, stationary, printers, office rental, meals, "networking" events -- can be written off as company expenses.

                      But, of course, you could be audited if all of your expenses aren't legit e.g. buying a boat with company money.

                      I do know that this is how a lot of independent contractors with a specialist skill operate. And I do know that this is what "how to get rich" type books teach you about managing your finances effectively.

                      Perhaps something to look into and consider...
                      -- Another Writer

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                      • #12
                        Re: Let's say you make 200K on your script...

                        You don't pay yourself a salary in this case (I believe) because you don't have employees. So it's really just REVENUE - EXPENSES = PROFIT (this is dumbing it way down). Your business revenue minus business expenses equals the taxable portion, your profit.

                        One of the great things about succeeding in this business, I think, is the financial freedom it gives you to put your money to work better for you than it's doing when you're working as a salaried corporate shill. It's much, much more flexible and you should be able to make it go much further than it would otherwise.
                        Reaction time is a factor, so please pay attention.

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                        • #13
                          Re: Let's say you make 200K on your script...

                          Most working screenwriters are incorporated as a 'loan out' corporation. The studio pays your corp to 'loan out' your services to them.

                          Commissions (mine are 30% -- Agents, Managers, Lawyer, Biz Manager)come out of your gross, expenses as well, and usually the corp zeroes out at the end of the year by paying you what's left as salary. Basically you operate a zero profit corporation.

                          I find that I net between 40 and 50% depending on how much I expense.
                          RIP Lew Gastoni.

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                          • #14
                            Re: Let's say you make 200K on your script...

                            Incorporating tends to get more valuable as your income and especially your expenses rise over time.

                            Several benefits of incorporation:

                            -Revenues to the business come in as gross income. This means you can control your money and when you choose to pay it to the IRS

                            -Corporation allows you to deduct all medical expenses OUT OF GROSS REVENUES. This can add up if you have therapy, regular medical bills, occupational or speech therapy for a a child, etc.

                            -Corp allows you to deduct anything associated with your business out of gross revenues, all the while lowering your actual taxable income. Cars, travel, meals and entertainment, portion of cable TV, movie tickets, all books and periodicals, office space in the home, outside the home, phones, cell phones, all medical, agents, lawyers, guild - this adds up to quite a lot of stuff you spend money on. It's all paid for out of your gross.

                            -Corp allows you to form SEP/IRA, a very powerful savings tool. You can put away up to 42K a year into a personal tax-exempt retirement savings fund - this is the best part - OUT OF GROSS REVENUE. You are essentially setting up a pension plan for the president of the company - yourself. Being able to take that much money off the top of your earnings is a stunningly powerful financial tool. Because in addition to getting that money into a personal retirement account, it is ledgered as a BUSINESS EXPENSE out of the corporation - thus decreasing your taxable income.

                            -You write yourself monthly, quarterly, or if you want to stretch it, annual paycheck for your services. This is your taxable income. Let's say you earn 500K. You could conceivably with agents, lawyers, all expenses have up to 150 - 200K in deductions. That means 300K is actual income. Progressive rates apply. And you can knock the personal income down further with mortgage tax deduction, spouse business expenses, charitable giving etc.

                            -MOST IMPORTANT thing about the corp is that it drastically DECREASES your chances of an audit. The main thing is this: IRS is prevented by law from auditing personal just because they are auditing corp or vice versa unless there is proof of really illegal commingling (that's why keeping clean books is imperative - no personal money into corp or vice versa).

                            Your personal income is high tier if you're making 400K. You are a prime candidate for an audit. But you would only be a prime candidate if your PERSONAL deductions looked excessive or fishy. Remember, with the corp, you now have a squeaky clean personal income tax return because all your expenses have been taken through the corp. You could basically file your personal tax return on a postcard. And if you are audited - shouldn't be much to argue about since you haven't taken any Schedule C deductions.

                            As for your corporation - you are a guppy in an ocean of enormous corporations. IRS would be wasting their time on a little corp like you when they could audit, say GM, or Google. You are a low importance target as a corp and thus chances of audit are extremely low. As low as if you were a person making 17K a year in personal income.

                            You are never safe from an audit. But the corp increases your chances of escaping one, and of emerging unscathed if you do get audited.

                            that said - an accountant once said to me (after I had overspent) - "when will you writers figure out that after taxes, expenses and commissions you only take home about 40% of your income?" And that is true. But I figure half of my life expenses or more are paid before that 40% hits - including retirement savings and medical bills. So it isn't a bad picture overall.


                            tao

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                            • #15
                              Re: Let's say you make 200K on your script...

                              Wow, talk about valuable 411. Don't kick yourself Qaz, this is actually one of the more informative threads in a while. And big thanx to UncaLeo and Tao for bringing some real "from the horses mouth" takes on it.

                              Hell, Tao might have a second career in dumbing down tax law for tax-retards like myself if he gets tired of the writing thing, lol. Tax talk is always like translating drunken-Russian to me, but his post was crystal clear.

                              Good stuff.
                              "U don' know me, muddafugga..."
                              - Al Pacino, Carlito's Way

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