ARTS + TAXES: A FRESH ARTS CHEAT SHEET
Yes, it’s true: the IRS considers being an artist as a small business. Whenever you, as an artist, spend money to practice your art, said expense could potentially be a business expense. Consult the IRS’ list of questions that determine your art as hobby vs. a business, as well as TALA’s webinar. According to the IRS: “Business expenses are the cost of carrying on a trade or business. These expenses are usually deductible if the business operates to make a profit.” Additionally, “To be deductible, a business expense must be both ordinary and necessary. An ordinary expense is one that is common and accepted in your trade or business. A necessary expense is one that is helpful and appropriate for your trade or business.”
As such, the following is a list of categories in which your expenses as an artist/business could qualify as deductible from your taxes. It’s important to note these expenses in general but just as important to speak to a tax professional to make sure they are deductible in your situation. Also, consider these as points of information and places to start research for your context as some of the following may not apply to you and vice versa (expenses that you encounter regularly in your business but not listed below).
Keep all the receipts for anything you’re thinking of writing off on your taxes!
If you have the option, consider having your receipts emailed to you and then save them in a folder, Dropbox or Google Drive to access them digitally. If you don’t have a reliable scanner, take as detailed pictures as possible using a camera/phone (the iPhone, for example, has a decent scan feature in the Notes app) in case the physical copy degrades (receipt ink is the worst) or is lost.
Establishing a reliable record-keeping process for you is key and is even a defining factor in how the IRS determines you as a business: “Whether you carry on the activity in a businesslike manner and maintain complete and accurate books and records.”
Deductibles to Consider
Printing costs related to your artistic practice can be deductible. For example, as a writer, I tend to not use my home printer to make an entire copy of my manuscript that I want to mark up and instead send it to FedEx. -Reyes
Postcards, posters/flyers, business cards, signage, stationary… the list can go on and on. -Angela
SOFTWARE + APPS
Quickbooks/ Accounting Software
Adobe Creative Suite + Social Media and/or Photo Apps
Have a subscription to Adobe Creative Cloud? How about a photo editing app on your phone? Have a Link Tree for your business Instagram? Any application that you use towards producing a finished product or marketing your work or services can be deducted as a business expense. -Angela
I used to get free Microsoft Office Suite from a job I had, but that expired recently and have to pay for the 365 subscription. I know there are some free alternatives, but I’m too used to Microsoft Word since all my years of files/writings are compatible in this format. -Reyes
Website, Domain + Web /Email hosting
I use Squarespace and have two domains for it that are important to my writing career in being found and contacted. –Reyes
Don’t forget website hosting fees! Paid a contractor to build or maintain your website? That counts too. –Angela
Materials/supplies costs for artists might include purchases of a visual artist’s painting supplies, a musician’s sound equipment, or a dancer’s costumes. Conceptual artists might need to buy a 100-pack of plastic combs! If you’re legit using it to make your art, it belongs here. -Julia
Notebooks, pens, paper, special paper, highlighters, all the good stuff a writer needs. –Reyes
My laptop burnt out last year, and not many places take your wild scribblings in notebooks as a submission anymore. Buying a laptop to type and send my work is very important to my career, to say the least. -Reyes
RESEARCH & EXPERIMENTAL COSTS
As a writer, reading is integral to my growth as a creative and active member of my artistic community. Thus, buying the latest books and seeing what other writers are doing is key to making sure I’m at the top of my game and support fellow writers. -Reyes
CONTRACT SERVICES/ CONTRACT WORK
As an event organizer transitioning to virtual channels, I’ve had to consult a lawyer on usage rights and fair use. -Reyes
Accountant/ Tax filing
Pay someone to do your taxes? How about Turbo Tax? Save those receipts! -Angela
Artist Contract Work
As an event organizer in my writing practice, I’ve used grant money, paid to me as a sole proprietor, to pay other creatives to contribute to my public-facing events/projects/readings. -Reyes
Though they are annoying, submission fees can be tax deductible in my case because it’s an integral part of being a contemporary writer and being known, read, and commissioned. -Reyes
Paid a fee to participate in an art market or exhibition? Counts as a business expense! -Angela
Did you take a writing workshop to improve your craft? Pay for a ceramic class to learn a new technique? You can write education expenses off as long as it “maintains or improves skills needed in your present work.” -Reyes
I go to conferences to network, connect, and discuss with other writers, publishers, and organizers. When I register for a conference, there’s often a registration fee which has been tax deductible in my case. -Reyes
As a former interior designer, I did a lot of driving– to client homes, architect meetings, furniture stores, (so many furniture stores!), etc. All those miles really add up over a year. Keep a travel log (in your phone or via a notebook) that lists miles driven each day and where and why you traveled. This applies to any business related travel. Travel to meetings, job sites, workshops or conferences, heck, even trips to Home Depot can count, etc. Then at the end of the year, add up the total miles and times by the IRS approved mileage rate for that year, and BINGO– a hefty tax deduction. -Angela
More Info: https://www.irs.gov/tax-professionals/standard-mileage-rates
The IRS allows for individuals to deduct a home office as a business expense if it qualifies. The IRS states: “Your home office will qualify as your principal place of business if you meet the following requirements.
You use it exclusively and regularly for administrative or management activities of your trade or business.
You have no other fixed location where you conduct substantial administrative or management activities of your trade or business.”
There are other qualifying factors to consider: https://www.irs.gov/publications/p587#en_US_2020_publink1000226302
If your home office qualifies, then you’ll have two options as to how to claim it as a deduction on your taxes: simplified or actual expenses, outlined here: https://www.irs.gov/publications/p587#en_US_2020_publink1000226317
Again, all these deductions must be related to your business as an artist.
Tax Filing Assistance
If you are using any tax filing help, make sure to call ahead and ask if any of the preparers on call have experience working with and/or are able to work with artists and their unique needs as a business. Tax specialists have areas of expertise (such as investments, retirement, real estate, etc.), and it’s important for you to know if your tax preparer can assist you and your art practice in the best way possible.
*Each service has different income levels to qualify.
Keep in mind that if you use a paid service, ask how much they will charge you to file (they may charge you as a small business, for example); do not assume you will be charged the lowest amount as an individual.
*Some places offer free services up to certain income levels and/or prerequisites.