If you made “significant” profit from your art and you intend on making even more money the following year, then you can qualify your activities as a business. If you made $3,000 on your art the whole year and made no profit on it, meaning the expenses to make the art were either $3,000 or more (which would put you at a loss), this would qualify in the eyes of the IRS as a hobby. You make some money on your artwork, but a lot of the time it’s not much and goes straight back into making more art. Let’s say you are an artist who is in the process of moving towards sustainability, but right now you have a salaried day job or you freelance as a graphic designer to pay the bills.
One of the big discrepancies that folks come across when trying to file taxes as an artist is whether they even should document the income from their art if it’s not “significant" or not their primary source of income. Tax season can be very stressful, but if you get good at keeping track of your sales, expenses, and incomes, it can be a gratifying way to reflect on how hard you worked all year. It's a way to assess how much money you made and what it cost you to make that money. Basically, doing your taxes is just a way to keep track of your fiscal year. Listing out your deductions for the IRS shows them that no matter how much money it looks like you made in your income, you also spent a lot of money on sustaining yourself and your work. Sure, you sold a thing, but you made no profit on it - you actually went into the red and had $100 worth of losses on this particular sale. As an example, let’s say you sold a painting for $100, but used $200 worth of materials to make the painting. Your losses are qualified as the amount of money you lost on making something happen. This picture consists of your losses and your gains - this is what the IRS wants to know on the most basic level. Every year when you file your Individual Tax Return, also known as your 1040 form, you are painting a picture of your financial life for the IRS. Photo by NeONBRAND What does it even mean to do your taxes?ĭoing your taxes as an artist is not that different from doing your taxes as any other kind of working person. A Simple Tax Guide For Artists Some of the most important things to know about doing your taxes as an artist By Karina Vahitova on January 31st, 2018
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