What is a Tax Withholding?
As a general rule, anyone performing a service in the US must be taxed on their income including most performing artists. The IRS uses withholding as a mechanism to ensure that tax is collected. Some states require venues to withhold a certain % of the artists gross income from their payout for a performance. At the federal level, venues may also be required to withhold a certain amount for foreign artists.
Using Prism's Tax Withholdings feature, you can automatically calculate the amount of tax that needs to be withheld from the artist payout at settlement.
Build Tax Withholdings into Deals
How to deduct a withholding amount in Offers and Settlements
You will have the option to include a tax withholding amount when building out an artist deal on the Talent tab of an Event. Click the three dot menu next to the Offer or Settlement button and then click Edit. Below the Deal Type Settings, there is a Tax Withholdings toggle to toggle on if you would like to account for withholdings (see photo below).
Fill in the tax withholding specifics based on your tax requirements.
Minimum Threshold: Tax withholdings may be subject to a minimum threshold before a percentage is withheld from the payout. For example, in Missouri, a venue must withhold 2 percent if the entertainer is paid more than $300 for all performances.
Withholding %: The amount to be withheld from the artist's final payout.
Due Date: When the withholding is due to the tax entity.
Note that Prism does not support multiple withholdings at this time. If the artist is subject to multiple withholdings taxes, for example state 2% and federal 30%, you may be able to sum the two taxes (32%) as the Withholding % to obtain the correct payout numbers at Settlement.
Tax Withholdings on Offers
When a Tax Withholding is included in a deal, it will appear on the offer sheet in the Headliner section and the withholding % amount will be deducted from the payout if it passes the Minimum Threshold. To have the Tax Withholding amount only appear at Settlement, add the withholding amount to the deal after you have created the Offer.
Tax Withholding on Settlements
When a Tax Withholding is included in a deal, the external settlement document will automatically deduct the Tax Withholding % amount from the payout if it is greater than the Minimum Threshold. The Event must be in the Confirmed, In Settlement, or Settled status to generate an external settlement, learn more about settling here.
Including and Excluding Adjustments in Tax Withholding Calculations
There may be cases where Adjustments to artists payouts should also be subject to Tax Withholding. For example, if an artist is paid $1,000 for a performance plus a Production Buyout of $400, the total $1,400 may be subject to Tax Withholdings. To add the Production Buyout amount to the artist payout add a $400 Adjustment bonus. When adding the Adjustment to a deal that has a Tax Withholding, you have the option to include the Adjustment amount in the Tax Withholding calculation or not. Turning the toggle on would mean that the Tax Withholding would be calculated as $1,400*Tax Withholding %.
Reporting on Withholdings
Customers with the Silver and above package have access to Payments Reporting and the ability to report on Tax Withholdings amounts. To upgrade your account or confirm access to Payments Reporting, contact email@example.com.
On the Payments tab in Reporting, generate a report of all upcoming withholdings payments. Use the Filters to the right to Filter down the list of events and select the Payment Type "Withholdings" toggle to see only Withholdings payments in the report. Use the Status toggle to mark them as "Paid." Export a list of all withholding payments using the Download CSV button.
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