How they get calculated
SAG-AFTRA describes residuals as formula-based, depending on the contract in effect when the work was done, how much time a performer worked, the type of production, and the market where it's shown: free TV, basic cable, pay TV, home video, or new media. For theatrical films, residuals from later markets are often calculated as a percentage of the distributor's gross receipts from that market, which is then divided among the covered performers. Television formulas can instead be based on a performer's original pay or on scale.
The details belong to the unions' residuals departments and the payroll companies that process them. A producer rarely calculates residuals by hand, but should understand what triggers them.
A producer's example
An indie feature shot under a SAG-AFTRA low-budget agreement has a theatrical release, then sells to a streaming service two years later. The theatrical run is the market the performers' original pay covered. The streaming sale is a new market, so residuals are due to the cast based on the formula in the agreement the film was made under.
The DGA agreement, if the film was DGA, and the WGA agreement, if the script was written under it, trigger their own residuals for the director and writers from the same sale.
Where residuals hit the paperwork
In prep, residuals don't show as a line in the budget the way wages and fringes do. They show up in the business affairs deal. When the film sells, the distribution agreement should say who assumes residual obligations, and the unions usually require a signed assumption agreement from the distributor. Buyers look at that obligation when they value a film. The pre-sales and minimum guarantees guide covers how those deals are structured.
Common confusions
Residuals aren't owed for the initial use the performer was paid for. A theatrical film's opening run doesn't pay residuals.
New media rules are different. Under SAG-AFTRA's New Media Agreement, low-cost original programs may owe nothing for new media exhibition, while higher-budget programs have terms negotiated with the union.
"Residuals" and "backend" aren't the same thing either. Backend points are a share of profits written into individual deals. Residuals are union minimums that apply to every covered performer, director, or writer, whether or not the film ever makes a profit.