During the Strikes, Actors Got Financial Grants. Now It’s Tax Season and Some Are Scrambling

In 2023, the SAG-AFTRA Foundation became a lifeline for many actors, distributing emergency financial aid to those who were struggling to make ends’ meet amid their union’s 118-day strike. A host of the union’s starriest members — George Clooney, Julia Roberts, Leonardo DiCaprio, Meryl Streep and Oprah Winfrey, among others — donated millions to the Foundation’s Emergency Financial Assistance program, filling the coffers for peers who could prove they were in dire financial need during the work stoppage. The Foundation distributed more than 5,000 grants between May and December 2023, with assistance totaling over $11 million.

Now, however, some recipients of that aid are confused and scrambling as they have been sent 1099 tax paperwork for the grants, putting them in the position of having to decide whether to report these grants as income or not on their 2023 tax returns. The SAG-AFTRA Foundation has taken the position that the grants could be considered taxable income by the Internal Revenue Service, but it’s on the recipients to consult their own tax advisors and determine how to report the aid — and, if they decide to report the grants as income, they likely would owe additional income tax as a result.

Several recipients who spoke to The Hollywood Reporter are waiting to file their taxes until they get more clarity on the situation. “It’s just a kick in the gut. It’s like, shoot, just when you think you’re being helped and it’s all good, now you’ve got to deal with this battle,” says one longtime SAG-AFTRA performer who received a few thousand dollars in aid during the strikes. Like most people who spoke about the situation, this person asked to remain anonymous. (THR has checked documentation with all sources to confirm they did indeed receive a SAG-AFTRA Foundation grant.)

According to a spokesperson, the SAG-AFTRA Foundation consulted a team of outside attorneys, certified public accountants and auditors and was advised to take a cautious approach with the grant, as the IRS might consider it taxable income. Therefore, the Foundation asked applicants to sign a W-9 form and issued 1099 forms to recipients.

In a statement, the SAG-AFTRA Foundation said, “The SAG-AFTRA Foundation, through the tremendous generosity of our Board, donors and some very special individuals, continues to provide emergency financial relief assistance to thousands of our members. We are grateful for this support which allows us to continue to prioritize the needs and protection of our members during even the most challenging times.”

The SAG-AFTRA Foundation also suggested in its public language that the grants could be deemed taxable income by the IRS. The first performer points to an email she received from the Foundation when she was approved to receive the aid, which noted that “this grant may be considered taxable income by the IRS.” (She didn’t believe that would actually happen: “I never thought grants or things like that would be taxed,” she says.) In a frequently asked questions page about the program, the Foundation also notes, “An Emergency Financial Assistance Grant is intended as a gift; however, please consult a tax professional if you are uncertain whether any amounts paid to you will need to be reported on your personal income tax return.” A spokesperson adds that this sentiment was repeated on the application for the grant.

Ultimately, the details matter, according to lawyers consulted for this story. “Hardship grants are generally treated as donations or gifts to an individual which are exempt from the individual’s federal income tax. They’re exempt, and therefore no 1099 form is needed,” says Jacqueline Motyl, co-chair of the Nonprofit Organizations Practice Group at Fox Rothschild. But the unique circumstances of the strike may complicate that usual designation. Adds Withersworldwide partner and tax attorney Elizabeth Bawden of the issuance of the 1099s, “There certainly are a lot of situations where a 1099 is required. I can certainly see, if the idea here is that [the aid] is essentially wage replacement as a result of the strike, where that may make sense.” (The SAG-AFTRA Foundation is a separate nonprofit organization from the actors’ union, with its own bylaws and board of directors. Notes a spokesperson, “The union does not direct any of our business.”)

Just because a 1099 was sent doesn’t disqualify the grants from being considered gifts that are excludable from income, adds Loyola Law School professor Katherine Pratt, who specializes in taxation. “The payor errs on the side of submitting the 1099, if there’s any question. So it’s kind of a CYA [Cover Your Ass] move for a payor to send out 1099, even if the payor believes and intends for the payments to be non-taxable gifts,” she says. This then “shifts the administrative burden onto the payee,” who must then decide how to report the payment.

The Internal Revenue Service operates an automated system that flags mismatches between information returns from third parties (like 1099 forms) submitted to the IRS and individuals’ tax returns, and the issuing of 1099s in this case makes it “more likely that the payees might get pushback if they exclude,” Pratt says.

When asked about the SAG-AFTRA Foundation situation, a spokesperson for the IRS referred The Hollywood Reporter to its publications about what is considered taxable versus nontaxable income and what constitute “gifts” and to the instructions for 1099-MISC and 1099-NEC forms, but did not address the specifics of the situation.

A second recipient of the SAG-AFTRA Foundation aid raises concerns about the organization’s advice that recipients seek out their own tax advisors to determine how to proceed. “I know that a lot of the SAG-AFTRA members cannot afford to go to an accountant right now because they’re still suffering from the impact of the strike,” this person notes.

Says a third who was given the same guidance, “I wanted to reply, can the Foundation provide me a tax professional because I received a grant for emergency assistance? I don’t have the means to go out and hire somebody. This is all very conflicting.”

Adding to the confusion, all beneficiaries of the program that THR spoke with initially received 1099-NEC forms, which is classically provided to non-employees of a business that were paid at least $600 in a year for services performed. Two sources who reached out directly to the Foundation for clarity on this form say they were told that it was issued in error, and were reissued 1099-MISC forms. Others who spoke for this story that did not contact the Foundation about this issue say they initially did not receive 1099-MISC forms. But, two days after THR sent an inquiry about this discrepancy in forms to the Foundation, starting Friday those latter grant recipients received a message from the SAG-AFTRA Foundation saying that the 1099-NEC forms were a “clerical error” and they would be receiving a 1099-MISC form.

Some recipients of the emergency aid are remaining sanguine about the situation. Actor Christine Robert, previously an accountant for 17 years, assumed the two grants she received — one for over $2,000, another for $4,000 — would be considered taxable. “Nobody likes to pay taxes,” she says, but “that’s our social contract with each other, for good or ill.”

A fifth SAG-AFTRA performer who received two rounds of assistance from the Foundation says he didn’t even consider possible taxation when he applied for the grant. “When you’re in that position, you don’t think about, oh, are we going to get taxed or not? It just didn’t cross my mind. I was just happy to get the money.”But he isn’t too surprised or upset, he says: “I’m just a beat-down man when it comes to taxes… I just accept the fact that I’m going to get — pardon my language — screwed, no matter what happens.”