ARTISTS' PROFESSIONAL TOOLBOX ::
Tax Tips for Artists
If you're a working artist looking to keep more of your income in your own pocket rather than it going toward taxes, here are some helpful organizing tips.
Create a business log
When doing your taxes (or in case of an audit) the most useful documentation you can have as a working artist, besides receipts, is to keep a business log book. You can use a notebook or a computer spreadsheet, a calendar or a date book for this purpose. Each time you travel anywhere or purchase anything that is tax deductible, make a notation in your log.
For purchases, write down:
- The date
- The amount
- What you purchased
- The purpose of the purchase (how it relates to your business of doing art)
- Where you purchased it
For tax-deductible trips, write down:
- The date
- How many miles you traveled (or if you took a bus/taxi, then the cost of that plus any parking expense)
- Where you traveled from/to
- The purpose of the trip (was it to meet with a gallery owner? An audition? Travel from your first job to your second job?
For business-related meetings, write down:
- The date
- Who you met with
- The business purpose of the meeting
- Where you met
- Costs associated with the meeting
For charitable donations, write down:
- The date
- The amount (if the donation is under $75, the notation in the business log can take the place of a written receipt)
- Who/what the donation was for
Organize your receipts
To manage your receipts, mark the same information as above directly on your receipts and keep the tax-deductible receipts organized in categorized folders or envelopes. (Since many places now use soy-based inks, the ink will fade over time, so it's important to make sure the amount, date and vendor information is visible. Making a Xerox copy of receipts or rewriting the information on receipts will help).
Folders or envelopes can be labeled by month (so they correspond with your business log), or by business-related categories such as:
- Advertising/Publicity
- Commissions/Fees
- Professional Fees
- Equipment Purchase
- Office Expense
- Rent/Lease
- Repairs/Maintenance
- Supplies
- Licenses
- Out-of -Town Travel
- Professional Development (Classes/Workshops)
- Research
- Trade Publications
Qualified Performing Artist
If you have an annual adjusted gross income of $16,000 or less, and you received two or more W-2's from performing arts companies of which two or more paid you $200 or more, and your filing status is not "married filing separately," then you qualify under this category. You can deduct your performing-arts related expenses directly from Form 2106 or 2016-EZ onto Form 1040 Line 24.
Where to Report Artist Income/Deductions
1040 or 1040-EZ
All your W-2 income (income where you worked as an employee for an employer where they took the taxes out of your paycheck) will be reported on the main tax form.
2106 or 2106-EZ
For deductions related to your W-2 income, use a 2106 - Unreimbursed Employee Business Expenses form. All union-related income and dues would be reported on this form.
Schedule C
All the miscellaneous income you receive (income not reported to you on a W-2) for your work as an artist should be reported on this form. This usually includes income reported via 1099's or other payments you received that weren't previously taxed. A Schedule C is used to report profit or loss from business, and your work as an artist is considered by the IRS as a business. You can then deduct all expenses related to that income on the Schedule C. If you make more than $400 doing work that wasn't taxed, you need to fill out a Schedule C.
Business interest is deductible, personal interest is not. So if you have one credit card that you use just for business expenses, then you can deduct any interest paid on that card only.
If you're an independent contractor and paid your own health insurance, your health insurance premium is deductible on your Schedule C.
You should not show a loss more than two years out of five on your Schedule C. If you do, the IRS will consider your "art" a hobby and not a profession.
Only deduct what you have records/receipts for.
This information is intended for general information only. You should seek professional advice related to your specific situation, including any legal advice that may apply. The city of Seattle makes no representation that the information is complete, accurate or current. For more information on filing your taxes, contact the Internal Revenue Service.
