How Do I Get a 1099k for My Art

A Simple Tax Guide For Artists

Some of the about important things to know nearly doing your taxes as an artist

Past Karina Vahitova on January 31st, 2018

Photo by NeONBRAND

What does information technology even mean to exercise your taxes?

Doing your taxes every bit an creative person is not that unlike from doing your taxes as any other kind of working person. Every twelvemonth when you lot file your Individual Tax Return, also known equally your 1040 form, you are painting a picture of your financial life for the IRS. This picture consists of your losses and your gains — this is what the IRS wants to know on the nigh basic level. Your losses are qualified as the amount of money yous lost on making something happen. As an example, let's say you sold a painting for $100, but used $200 worth of materials to make the painting. Sure, you sold a thing, but y'all made no turn a profit on it — you actually went into the crimson and had $100 worth of losses on this item sale. List out your deductions for the IRS shows them that no thing how much money it looks like yous fabricated in your income, you too spent a lot of money on sustaining yourself and your piece of work. Basically, doing your taxes is just a way to keep track of your financial year. Information technology's a manner to assess how much money y'all made and what information technology cost you lot to make that coin. Revenue enhancement season can be very stressful, but if you get good at keeping rail of your sales, expenses, and incomes, information technology can be a gratifying mode to reverberate on how hard you worked all year.

Hobby vs. Business concern

One of the big discrepancies that folks come beyond when trying to file taxes as an artist is whether they even should certificate the income from their fine art if it'southward not "significant" or non their primary source of income. Permit'south say you are an artist who is in the procedure of moving towards sustainability, but right now you have a salaried solar day chore or y'all freelance as a graphic designer to pay the bills. You make some money on your artwork, but a lot of the fourth dimension it'south non much and goes straight back into making more art. If you made $3,000 on your art the whole year and made no turn a profit on it, meaning the expenses to brand the fine art were either $three,000 or more (which would put you at a loss), this would authorize in the eyes of the IRS every bit a hobby. If you made "pregnant" profit from your art and you intend on making fifty-fifty more money the following year, and so yous can qualify your activities as a business. Y'all practice not need to be a registered LLC or other kind of corporation to be a business — y'all just need to be making a turn a profit off your work and have the "intention" to do and so. Now, I put the words "intention" and "meaning" in quotes considering the guidelines the IRS provides regarding whether you qualify your art activities equally a business or as a hobby are very vague and ultimately leave the decision in your hands. I wrote this department for you because any income that you have needs to exist classified when you are filing your 1040 form. You will be asked to qualify your fine art income as either a hobby or a business. You tin cheque out the leading questions the IRS provides for this conclusion here.

Standard Deduction vs. Itemized Deduction

Oh, deductions! The joy! A taxation deduction arises due to diverse types of expenses you've had throughout the year. In that location's a whole bunch of things that are considered to be revenue enhancement deductions, but some of the most common deductions are expenses on your business, medical expenses, property taxes, and charitable donations. Deductions exist to basically give you a break with the understanding that no matter how much coin comes in, a proficient chunk of it goes out. Though the number yous come up upward with in deductions will not lower your revenue enhancement rate (the percentage yous pay each year), information technology will lower your taxable income. In other words, information technology volition lower the amount of money the IRS will consider yous to have truly made that twelvemonth that they'll ask yous to pay taxes on.

Deductions come in two flavors: the itemized deduction and the standard deduction. The standard deduction is for folks who either did not keep records of their expenses throughout the year or know that they will probably not take itemized expenses that are larger in sum than the standard amount. The standard amount is set each year by the IRS and is based on one's filing status. Information technology is the dollar amount that y'all can automatically write down as a deduction when you are filing your taxes. To figure out what your standard deduction is for this tax flavour, you tin utilise this IRS provided online tool. A standard deduction for a unmarried person is normally effectually $half dozen,000 per year. According to the IRS you should only do itemized deductions when yous know that it will be a larger number than the standard.

If you feel that your deductions for a revenue enhancement year will be larger than the standard deduction provided past the IRS, then y'all should use the 1040 class add-on called Schedule A to list out your expenses item by particular. Anything that you lot employ to make something that you later sell tin can exist listed every bit a deduction on this subform. Y'all can read this commodity to see what other kinds of things can be listed as deductions on this form.

Crowdfunding and Taxes

Maybe you lot crowdfunded a work of fine art last year! Technically, unless you are crowdfunding on behalf of a 501(c)(3) not-profit, all the coin you make through crowdfunding is considered to exist income and should be filed under "Other Income" in Line 21 of your 1040 form. If you make over $20,000 on Kickstarter or Patreon or any other crowdfunding platform, they are required to transport you a 1099 form which details the amount of transactions and the amount of money you made in an official fashion. Fifty-fifty if y'all made less than $20k and practise not receive a 1099, y'all still need to report the income yous made on your taxation return. Here's the exciting affair nearly crowdfunding and taxes: when you lot run a crowdfunding campaign, you create a budget that allows you to pay yourself for your time and all other expenses involved in the projection. When crowdfunding, you are seldom crowdfunding for profit — rather, yous are just asking for the exact corporeality of money you lot need to make a piece of work of art happen. When yous document your crowdfunding income for revenue enhancement purposes, you will also certificate your expenses for the project, which should be equal. As everything that went in also went out to create the projection, this essentially means that the money that went towards your campaign will be deducted from your annual income by the IRS.

Forms to Know

In this last section, I want to list out some of the important forms you lot need to know in lodge to properly file your taxes.

1040 form - the standard form individuals utilise to file their taxes every year. It tin be found here.

W-two form - the form employers are required to requite to y'all every year so that yous can use it to document your income on your 1040 when you are filing

1099 form - a form used to detail various types of income. There are many different types of 1099s, only since they are usually provided by whoever paid yous coin, you lot don't need to worry about knowing all the kinds. If you're curious, you can read more most 1099 here.

1040 Schedule A - a form you adhere to you standard 1040 course and where yous detail your itemized deductions. You can read instruction for 2022 here.

A Disclaimer

Only to be clear, we're non CPAs or tax professionals. This article is meant to help demystify the procedure and should not be considered legal or financial advice. We always recommend yous consult the IRS website and talk to a professional taxation advisor earlier yous file.

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Source: https://voidacademy.com/a-simple-tax-guide-for-artists/

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