Every time I talk to one of my singer-friends back home about some particularly gnarly or complicated piece of rigmarole that relates to my job as an opera singer in a German opera house (auditioning, applying for visas, how to dress for auditions, travel hacks, contract negotiation) they say to me, "someday you should write a book about this." Well, today is not the day I write that book. But today is the day I had to assemble every single receipt related to my foreign (read: non-German) income for the Finanzamt because the Germans do NOT do taxes like the IRS does. So here's part 1 in the multi-part series.
FULL DISCLOSURE - I AM NOT A TAX PROFESSIONAL. I AM AN OPERA SINGER.
Part 1: Taxes in Germany
Residency/non-residency, guesting/festing
If you are a US resident guesting in Germany, you need to get your hands on an A1 from the Social Security office and turn it over to the finance office at the opera house. This will, in most cases, keep the non-US house you're working for from taking out their version of social security, disability, etc, because the A1 says that you'll pay taxes on this income at home in the USA. In Germany, they will still take out unemployment. If your agent is being paid directly by the opera house, there will also be Umsatzsteuer (value-added tax) on the agent fee. If you are paid a Reisepauschale (lump sum for travel) they may also assess some kind of blanket income taxes on that. You will receive a statement from the opera house detailing your payments and the breakdown of what's what. Keep them, and ask the finance office to explain and translate exactly what all those abbreviations mean. Not all houses code things the same, so I won't bother listing them here.
If you have taken a Fest position at a house in Germany, you are an employee. You will have taxes taken out for Krankenkasse (health insurance, split between employer and employee), Arbeitlosengeld (unemployment), Pflegeversicherung (disability), Solidaritätszuschlag (solidarity tax - reunification), and Rentenversicherung (pension). Again, this list is neither exclusive nor exhaustive. If you register as a particular faith (they will ask you when you go to register for residency), they will take out church taxes. The percentages vary depending on your Steuerklasse (tax category - married, unmarried, with children, without, etc).
IF YOU GO FROM A GUESTING NON-RESIDENT TO FEST RESIDENT INSIDE ONE CALENDAR YEAR, YOU MUST FILE A FULL TAX RETURN IN BOTH COUNTRIES. Take a tip from someone who's going through this right now - bring with you every shred of paper that pertains to that calendar year. The last thing you want to have to do is send someone into your storage unit to hunt for receipts.
**Edit for clarification: to my knowledge, so long as one holds US citizenship, one MUST file US taxes. I hear differing reports from expats, so check with an account or four.**
Guesting while Fest (what to expect, so you don't spit out your coffee when you see what shows up in your bank account)
If you are industrious/tenacious/lucky/in-demand enough to guest on the side while also singing at your Fest job, good for you. It's a great way to supplement your income. You'll usually be given a flat rehearsal fee (either as a per-day figure, or a lump sum for a time period) and either a Reisepauschale or reimbursement for travel. Housing is almost never included. Know this in advance, and don't be left looking for a hotel room the day you arrive. Guesting engagements are usually assessed at Steuerklasse 6, which is about 50% if you're married, about 60% if you're unmarried. So if you are engaged Fest at a house, married, and your guest contract says you'll be paid 10K (assuming the opera house splits a 10% agent fee with you 40/60), you can expect about 44% of that to show up in your bank account, after taxes.
The good news: if you keep track of all your expenses, you're often entitled to a refund of some amount. Hard to swallow on payday, I know, but go in with your eyes open.
Documentation
Here's the basic rule. Keep every piece of paper. Every receipt. Everything. The IRS will take your word for it unless they decide to audit you. The German Finanzamt is not so trusting. They want it all up-front. Receipts. Contracts. Everything. Food doesn't count for the Germans - they use a per-diem. Start a spreadsheet with a tab for every state or country you work in. Detail the date, the transaction, the amount (in local currency, EUR and USD, check your daily exchange rates and note them), and what it's for. If the expenses are associated with a specific gig, make a column for the ensemble/opera house/concert organization, and the dates you were engaged to work there. Put the receipts for that spreadsheet in a large envelope marked TAXES 2014. Start a folder on your desktop where you can print to PDF everything you book online - train tickets, plane tickets, invoices from your voice teacher. Do this as you go along because it is a PAIN IN THE ASS to do it later.
Deadlines
Truthfully, this has yet to become clear to me. When you live outside the US for more than 6 months, you are granted an extension of 2 months to file your US taxes (June 15 instead of April 15). HOWEVER - an extension to file is NOT an extension to pay. Read that again.
So let's say you get your US taxes all tied up and paid by April 15. Good for you. No penalties. But let's say you need a little more time and you get them done by June 15. Unless your accountant overestimates and includes a penalty, you'll probably get a bill come September saying that you owe the IRS something ridiculously negligible like $7.27 and that if you don't pay by the date (which has already passed, because you're receiving your mail outside the USA) that amount will go up to $7.29. German taxes are a bit more complicated, mostly because you need to have your US taxes mostly done before you can file your German ones. But their deadlines aren't nearly as nuts - I think we finished filing ours around July. Downside - if they come back and say they need additional documentation for anything, you will not see one red cent of refund until they decide they're done reviewing your case.
What you can deduct (this list is neither exhaustive nor exclusive)
Audition clothing, audition shoes, makeup, trips to your hairdresser, stockings, suitcases, gowns, medicine, doctor visits, certain toiletries (if they can be put under the heading of 'grooming'), your cell phone, prepaid cell phones abroad, public transportation, taxis to and from the airport/gigs/concerts, voice lessons (this includes those skype lessons you have with your teacher when you're a continent away), sheet music, CDs, tickets to a performance, the computer you use to manage your life, accounting fees, banking fees (wire transfer fees), tax preparation fees, temporary gym memberships, plane tickets, train tickets, hotels, airport wifi, in-flight wifi, hotel wifi, tips and gifts to your makeup artist/dresser (IF YOU DOCUMENT IT), rental cars, baggage fees, union dues, agent fees. The list can go on and on. When in doubt, ask your accountant.
Dealing with accountants
If you are not detail-oriented, pour yourself a strong drink. Dealing with accountants is not always easy. Dealing with accountants in a foreign language is enough to drive anyone to Xanax. Your best bet is having everything laid out and labeled as clearly as possible so that you can send it to them via Dropbox or some other kind of file transfer. I prefer services like Dropbox and email because it starts an electronic trail between you and that person. Start early. Ask for an estimate of their fees, based on your needs. Ask colleagues who they use, especially ones whose tax situation is similar to yours.
This is the hardest part: do not assume that your accountant will get everything right. Be emotionally (and temporally) prepared to comb through your tax return, line-by-line, to make sure nothing is missing and nothing appears twice where it shouldn't. Check your social security number. Check your address. Check your banking details. Do this every time you receive documentation from them. If they make a mistake and you don't catch it, you are still responsible for the content of your tax return. Period.
Life is complicated and messy and an opera career often feels like the teacup ride at Disneyworld - looks like lots of fun and bright and shiny from the outside, can give you vertigo and/or induce vomiting once you're whirling around in a suddenly-unstable-seeming vehicle from which there is no immediate escape. When in doubt, write it down, ask questions, get professional advice, do your homework. There is no substitute for due diligence, and the quantity or quality of talent you possess as an artist is not worth one iota to the IRS or the Finanzamt when they demand to know where the money came from and where it went. The more you know.
Part 2: ??? I'll take suggestions.
