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[STATUS] Tax Season Hiatus
7 years ago
IT HAS BEGUN
It is now tax season. Jan 29 is the first day that filing will be available.
This is your yearly reminder to file and your yearly notification that I will be on hiatus until April 17. (The 15th is a Sunday. The 16th is a government holiday.) I still try to check in on FA on my phone, but will not be able to answer notes or do art.
If you made more than $400 (after expenses) in income from art, you must file a 1040 and you will owe Self Employment Tax. SE tax is calculated separately from income tax and cannot be eliminated with deductions or non-refundable credits. Your parents cannot claim your income on their return. You must file it yourself. If that income was in cash and you think it is untraceable, file anyway and pay the amount you owe. Don't play dice with the IRS.
If you made retail sales within your state, you may owe sales tax to your state.
If you made retail sales outside of your state, you may owe sales tax to that state, but the convention probably took care of it.
If you made sales online, the buyer is supposed to pay use tax. You do not owe sales tax.
If you paid a contract worker more than $200 during the year to do labor associated with your business, you must issue a 1099MISC. If that person gets hit with an audit, you will be penalized for not issuing the appropriate document.
You cannot deduct the entire cost of a new computer for art. You must estimate business use percentage based on real numbers, like the number of hours per day that you work verses the total time that you use the computer.
You can deduct the entire cost of a new tablet or art supplies, because they can't be used for any purpose except to make art. (Assuming you produce enough commissions that you could feasibly argue in court that your art is profit motivated.)
The standard mileage for 2017 is 53.5 cents. If you take this deduction, you cannot also deduct gas. Only the owner of the car may take the deduction.
The simplified home office deduction is still $5/sqft up to 300 sqft.
Spotify, Netflix, or other entertainment is not a deductible business expense even if you use it while working.
The new GOP tax plan is not in effect for tax year 2017 and will not affect your 2017 returns due in April 2018.
The health insurance mandate is still in effect for tax year 2017 and can still generate penalties for your 2017 return.
(This is verifiable general information, not tax advice. None of the above should be used for the purpose of tax evasion.)
It is now tax season. Jan 29 is the first day that filing will be available.
This is your yearly reminder to file and your yearly notification that I will be on hiatus until April 17. (The 15th is a Sunday. The 16th is a government holiday.) I still try to check in on FA on my phone, but will not be able to answer notes or do art.
If you made more than $400 (after expenses) in income from art, you must file a 1040 and you will owe Self Employment Tax. SE tax is calculated separately from income tax and cannot be eliminated with deductions or non-refundable credits. Your parents cannot claim your income on their return. You must file it yourself. If that income was in cash and you think it is untraceable, file anyway and pay the amount you owe. Don't play dice with the IRS.
If you made retail sales within your state, you may owe sales tax to your state.
If you made retail sales outside of your state, you may owe sales tax to that state, but the convention probably took care of it.
If you made sales online, the buyer is supposed to pay use tax. You do not owe sales tax.
If you paid a contract worker more than $200 during the year to do labor associated with your business, you must issue a 1099MISC. If that person gets hit with an audit, you will be penalized for not issuing the appropriate document.
You cannot deduct the entire cost of a new computer for art. You must estimate business use percentage based on real numbers, like the number of hours per day that you work verses the total time that you use the computer.
You can deduct the entire cost of a new tablet or art supplies, because they can't be used for any purpose except to make art. (Assuming you produce enough commissions that you could feasibly argue in court that your art is profit motivated.)
The standard mileage for 2017 is 53.5 cents. If you take this deduction, you cannot also deduct gas. Only the owner of the car may take the deduction.
The simplified home office deduction is still $5/sqft up to 300 sqft.
Spotify, Netflix, or other entertainment is not a deductible business expense even if you use it while working.
The new GOP tax plan is not in effect for tax year 2017 and will not affect your 2017 returns due in April 2018.
The health insurance mandate is still in effect for tax year 2017 and can still generate penalties for your 2017 return.
(This is verifiable general information, not tax advice. None of the above should be used for the purpose of tax evasion.)
I technically have a registered business (I filed a DBA) but I'd also planned to be selling books by this point. Still working on that.
The amount is still included in AGI, but can be wiped out with your other deductions.
One of the major factors that has stopped me from opening for commissions was I couldn't figure out what to do for tax purposes. I tried researching and even asking on forums with little help.
Do you have any sites I could use to learn more about taxes in relation to freelance artwork commissions?
I don't know of anything written specifically for freelancers or laypeople, but you can always ask me directly or go to an accountant in your area. My firm specializes in small partnerships and scorps, but as a freelancer, I'm required to know all this stuff for my personal return too.
I have a career outside of art and for the longest time I wasn't sure if I include commission freelance work on my current tax document or on some other document. I'll definitely be checking out those sites. Thank you!
Business income goes on Sch C, which flows into Sch SE and on to the front page of 1040. Check out the form instructions for those. It's a lot easier to read than the IRC.