How Guild Membership Affects Your Taxes and Investments
“My love, tonight we will celebrate this ecstatic joining of our spirits with the union of our aching bodies” - HEARTBREAKERS
written by Robert Dunn and Paul Guay & Stephen Mazur, directed by David Mirkin
(3-minute read)
If you are a member of one of Hollywood’s major Unions or Guilds, then you no doubt are aware of some of the benefits awarded to you. Things like guaranteed minimums and health insurance are probably high on your list of advantages. You might also be aware of the Pension & Health mail you receive but never actually read.
Congratulations are in order if you’re a member. You’ve worked hard to get where you are, and you want to continue this good fortune. But there are consequences to being afforded this membership, both good and bad.
MORE PAY MEANS MORE TAXES
Yes, in general you receive better wages than those who are non-union. If you get paid more, then you will owe more to the government. I once overheard my CPA congratulate his client because the client had to pay more taxes that year. If he owed more to the IRS that meant he made more money.
Being told we owe more in taxes is usually not a reason to celebrate. But the CPA was right. The client made an additional $10,000 that year. If you’re a union member, then hopefully you’ll be paying more in taxes too.
If you have a Loan-out, then it’s even more important to plan for taxes. You will have to set aside your tax payments since they are no longer being withheld through your paycheck. You may want to hire a professional to help navigate this for you.
YOUR UNION PENSION IS A BIG DEAL
If you are in a union, then you most likely are participating in their Health & Pension plan. One of the best things about the Entertainment Industry’s unions is that someone else is funding your retirement.
Every time you work a union contract, the AMPTP is putting money into your pension. This pension consists of a pot of money that is being invested on your behalf. This money has a tendency to grow over time and, when you’re in your 50s, you can withdraw that money. If you don’t need it in your 50s, then you can keep that money growing for many more years before touching it.
YOU ARE NOW ACTIVE
Simply by being a member of your Guild means that you are considered an “active participant” in your pension, whether you worked that year or not. Why is this important?
If you are an active participant in a retirement plan such as a 401(k) or pension, there are income limits imposed for Traditional IRAs. You start to lose your tax deduction on your Traditional IRA contributions if you make more than $77k (single) or $123k (married). This can have a big impact on your taxes and overall retirement plan. For example, if you could reduce your taxable income by $7,000 every year for 25 years, that’s $175,000 of income you’re not paying taxes on. But you may not be able to do that due to being an active member.
Becoming a member of one of Hollywood’s Guilds is an incredible fete. You are rewarded for your hard work, and for the hard work of those who fought before you in order to get these improvements. Just make sure you understand the whole picture.
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