Here it is again—time to file those federal and state taxes. As artists, we typically spend more time engaging the creative side of the brain, which can’t be bothered with records and itemized lists of expenses. Creativity is great but best avoided when filling out tax forms.
If painting is mostly a pastime for you (and there is nothing wrong with that; you are in good company with the likes of Sir Winston Churchill), keeping records and expensing your costs is not a concern. Even as a hobby, painting can prove expensive and being able to declare these costs against other income may be tempting. Be aware that hurdles must be met. It’s best to contact a well-trained tax consultant for advice. If you’re pursuing painting as a career, though, learning to keep accurate records and knowing what can be deducted, becomes imperative.
Let me start by stating that I am not an expert on tax matters and certainly not an accountant; however, having done this for many years has led to a few observations that might prove helpful:
- Find a professional accountant or tax preparer and build a long-term relationship. Quick “drive through” tax businesses may not be equipped to understand the business of art. What we do is not a “cookie-cutter” business and requires a professional that has some experience working with artists. So many aspects of our lives are intertwined with the pursuit of creating art; it takes someone who understands the lifestyle and tax code to filter out what can, and cannot, be deducted.
- Keep good records and all receipts. Computer-based bookkeeping programs are very helpful. Personally, I use an old-fashioned line ledger (old habits are hard to break). Don’t procrastinate in recording the information. There is nothing more daunting than a shoebox full of old forgotten receipts.
- Set up a separate checking account and credit card for art related matters. This can make bookkeeping much easier. You know that everything on the statements had some art-related purpose. With online record keeping, these records can be directly downloaded to accounting software, making it even easier to track those expenditures.
- Deposit all income derived from your art, such as sales and tuition, into the dedicated checking account. Itemize these deposits by breaking them down into separate categories of income. Add a description to jog your memory, in case clarification is required.
- Place a small notebook in your vehicle and record mileage to and from all art-related activities. All those trips to the art store, framer, classes and shipping agent really add up. Even drives in pursuit of “landscape inspiration” are part of what we do.
- If you have a separate studio space solely devoted to your art, it can provide a major deduction. If you utilize a room within your living space, it can become a little tricky and is best left to your tax consultant to work out.
- Classes and workshops are considered part of continuing education. Everything involved can be deducted: tuition, travel, lodging, and meals.
It was Benjamin Franklin who said, “Certainty? In this world, nothing is certain but death and taxes.” If painting is a major expense in your life, it may prove helpful to talk to your tax adviser and see if you can’t declare some of it against your income, ultimately providing more money for pastel purchases.