This page is dedicated to information about tax for artists in the USA

It covers whether or not:
  • you can claim expenses against tax
  • your US art activities are a hobby or a business
  • your hobby is a for-profit endeavour in the eyes of the IRS
Plus what the IRS has to say about taxation that' relevant to artists

This page has just been published - and over time this page will be developed.

At present it's focused on identifying sources of information for you to read - rather than providing a comprehensive easy read. That's because you need to rely on your own judgement and not mine because I am not a US taxpayer
On other pages you can find generic information about tax and  tax in other countries you may sell to

NOT on this site

This site does NOT provide:
  • Definitive answers on all matters relating to tax records for where you live. 
  • "Professional advice" available from somebody  with a tax qualification and current expertise of tax affairs anywhere in the world. 
I have no personal experience of US Taxes.
You should engage/pay a professional for US tax advice IF:
  • your US tax affairs are complicated 
  • you have a specific US tax query which you can't find an answer to from official information available online via the IRS or other reputable sources.
Image: U.S. Treasury Department building, Washington | Wikimedia Commons

Is your art a hobby or a business in the USA?
​

Be sure to read the latest changes relating to the "Tax Cuts and Jobs Act 2018" below

Can you claim expenses?

Whether or not you can claim expenses as business expenses and hence as tax deductions depends on whether or not you are conducting your activities as a hobby or a business
In short - an activity qualifies as a business if it is carried on with the reasonable expectation of earning a profit.

Hobby or business in the USA?

The IRS asks questions to determine whether an activity is a business - or a hobby.
If you do not carry on your business or investment activity to make a profit, you cannot use a loss from the activity to offset other income.

Activities you do as a hobby, or mainly for sport or recreation, are often not entered into for profit.
​
Publication 535 (2014), Business Expenses

Is Your Hobby a For-Profit Endeavor?

For tax purposes, a hobby is an activity you engage in primarily for a purpose other than to make a profit. 
You are running an art business IF:
  • you put in time and effort to making it a business
  • you aim to make a profit;
  • on average, you make profits in 3 years out of five;
  • depend on your business for at least part of your annual income and livelihood
You must always declare your income for tax purposes - BUT you can only claim business expenses against tax if you have a business!
Although you must claim the full amount of income you earn from your hobby, hobby-related expenses are generally deductible only to the extent of income produced by the activity. Therefore, if you do not generate any income from your hobby, you cannot claim any deductions.
Taxes for Artists | Artgyst
If your efforts result in a profit in three-out-of-five consecutive years, your activity is presumed not to be a hobby by the IRS.
Taxes for Artists | Artgyst
The IRS provides a Checklist of questions (a "cheat sheet") - in "Is Your Hobby a For-Profit Endeavor?"
The following factors, although not all inclusive, may help you to determine whether your activity is an activity engaged in for profit or a hobby:

- Does the time and effort put into the activity indicate an intention to make a profit?

- Do you depend on income from the activity?

- If there are losses, are they due to circumstances beyond your control or did they occur in the start-up phase of the business?

- Have you changed methods of operation to improve profitability?

- Do you have the knowledge needed to carry on the activity as a successful business?

- Have you made a profit in similar activities in the past?

- Does the activity make a profit in some years?
​
  • In determining whether you are carrying on an activity for profit, several factors are taken into account. No one factor alone is decisive. Among the factors to consider are whether:

    • - You carry on the activity in a businesslike manner,

    • - The time and effort you put into the activity indicate you intend to make it profitable,

    • - You depend on the income for your livelihood,

    • -Your losses are due to circumstances beyond your control (or are normal in the start-up phase of your type of business),

    • - You change your methods of operation in an attempt to improve profitability,

    • - You (or your advisors) have the knowledge needed to carry on the activity as a successful business,

    • - You were successful in making a profit in similar activities in the past,

    • - The activity makes a profit in some years, and

    • - You can expect to make a future profit from the appreciation of the assets used in the activity.
REFERENCE:

The Tax Cuts and Jobs Act 2018 (TCJA)

Say you have an unincorporated sideline activity that you think of as a business. If your expenses from the activity exceed your revenues, you have a net loss. You may think you can deduct that loss on your personal federal income tax return. Not so fast. The IRS likes to claim that money-losing sidelines are hobbies rather than businesses—because the federal income tax rules for hobbies are not in your favor.
Thanks to an unfavorable change included in the new Tax Cuts and Jobs Act (TCJA), the rules are even worse for 2018-2025.
​​You can’t deduct hobby-related expenses under the new tax law—but don’t give up hope
REFERENCE:

Business Expenses for Artists

A self-employed artist may deduct any expense that is:
  • * directly related to the art activity
  • * ordinary and necessary, and
  • * not lavish or extravagant under the circumstances.
  • Tax Deductions for Artists
The Tax Cuts and Jobs Act established a brand new deduction that allows owners of pass-through businesses, including artists, to deduct an amount equal to up to 20% of their net income from the business. This is in addition to all their other art business deductions.
Tax Deductions for Artists
You need to keep proper business records if you want to claim expenses.
  • The type of expenses you can claim must be ordinary and essential and never ever lavish.
  • Some expenses must be calculated as "cost of goods sold" rather than the actual purchases of art materials you make in the tax year i.e. you can only claim the actual 'cost to make' expense of the artwork created/exhibited in the year.
  • The Tax Cuts and Jobs Act has established a new additional 20% deduction can now be claimed if your taxable income from all sources after deductions is less than $315,000
Directly related to art-making activity
  • Art materials / supplies - adjusted via keeping an inventory to what you have used not what you have bought (i.e. what you started with at the beginning of the year plus what you bought minus what you've got left to carry forward to next year)
  • art equipment
  • Studio expenses - used exclusively for your art business
  • Framing
Selling Art
  • copyright registration fees
  • submission fees for juried/open exhibitions
  • commissions for gallery sales
  • fees for online sales
  • Art Gallery Rents - when used for business for an exhibition
  • costs associated with maintaining a website
  • Shipping artwork
Office expenses
  • Office supplies - used only for your business
  • books and magazines related to your business
  • Insurance
  • accommodation, subsistence and travel expenses for necessary business travel (but only a proportion of some costs will be allowed e.g. only what you pay extra for meals because you are away from home - because you always eat!)
  • membership  and trade association dues/fees for necessary organisations
  • art education - the cost of classes
  • legal and professional fees
REFERENCE:
Annual Tax Mess Organiser for Writers, Artists, Self-publishers and Craftspeople
by Kiki Caniff
This is for people living in the USA who are involved in CREATIVE activities and who need do an IRS return.

​The important thing here is that the author is somebody who is experienced at helping self-employed businesses prepare for their tax return. She's got a basic model for how to do things which she then tailors specifically to groups of people who have a similar situation / tax issues.
Series: Annual Taxes
Paperback: 102 pages
Publisher: One More Press; 2 edition (January 6, 2016)

RECOMMENDED: Rated an average of 4.7 out of 5 stars on Amazon.com by 11 reviewers - there are some very complimentary reviews!

BUY THIS BOOK
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THE IRS - TAX FOR ARTISTS IN THE USA
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You need to file forms for both Federal and States Taxes in the USA

IRS - Key Web Pages

Most Popular
Here are links to the IRS pages most relevant to artists
  • Self-Employed Individuals Tax Center | IRS - This covers the definition of self-employed and the obligations of all those who are self-employed with respect to accounting records, tax returns and payment of tax
  • Deducting Business Expenses | 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.

More helpful publications by the IRS

Information For Information ForFiling/Paying Taxes
Stages of Owning a Business

See also: Insurance for Artists for more information about disaster recovery
The IRS has disaster loss workbooks for individuals ( Publication 584, Casualty, Disaster, and Theft Loss Workbook) and businesses ( Publication 584-B, Business Casualty, Disaster, and Theft Loss Workbook) that can help you compile a room-by-room list of your belongings or business equipment. This will help you recall and prove the market value of items for insurance and casualty loss claims.
New Tax Guide - for writers, artists, performers and other creative people 
(fifth edition)
By ​Peter Jason Riley CPA
​
If you are an American or live in the USA you may well find this book by Peter Jason Riley CPA to be helpful. It's specifically written to help with the tax affairs of creative people. Chapters include:
  • a chapter devoted to visual artists.
  • Crowdfunding for Creatives
  • Other Sates, Other Taxes, Other Countries and the Tax Home
Rated an average of 4.1 out of 5 stars by 7 customer review

BUY THIS BOOK

More tips about tax

Taxes & Bookkeeping for Artists - Steven Goldglit from New York Academy of Art on Vimeo.

Steven Goldglit - Managing Partner of Goldlit & Company speaks to students at the New York Academy of Art about taxes, bookkeeping and good habits on accounting for artists.

By Tax Advisers (USA)
By Arts Commentators
By art business bods
By Lawyers
By Newspapers
By Performing Artists
  • Tax Tips for Independent Artists
    Music Business career development articles, marketing advice, articles on Booking and touring for musicians and performing artists, agents and managers
Creativity is My Business
A Financial Organizer for Freelance Artists, Musicians, Photographers, Writers and Other Talented Individuals 
by Kiki Canniff

​The target audience for this book is the PART-TIME creative person - such as an artist - living in the USA who wants to understand the difference between being a hobby artist (which provides no tax benefits) and being a part-time professional self-employed artist.

​The book is essentially about how to avoid the hobby label and hence be able to calculate and deduct allowable expenses through setting up basic systems and recording all relevant data.

The author indicates she is somebody who has experience in helping creative people become more organised to IRS standards which can pass a tax audit.

(There's another Kiki Canniff book below. Buy one or the other but NOT both  Check out the contents page for both to see what I mean.)
Paperback: 102 pages
Publisher: One More Press
Date: September 10, 2012
BUY THIS BOOK