Frequently Asked Questions (FAQs)
The following information is from a Working with Money for Artists workshop presented at PAFA by Wally Moyer of The Bottom Line. These FAQs should serve only as a guide, not as a replacement for consulting a qualified accountant or tax professional.
If I sell a painting in a gallery, do I have to count the proceeds as income?
Yes. The gallery will likely issue you a 1099 form (if the sale is more than $600), and this income is reported to the federal government.
If I sell my art myself, do I need to collect taxes?
Yes. If you sell your art in Pennsylvania, you need to collect the state sales tax and submit it to Harrisburg. See state publications on the Pennsylvania state website: www.revenue.state.pa.us/portal/server.pt/community/sales%2C_use___hotel_...
What if I sell my work through an online site like Etsy? Do I still have to collect taxes?
As long as the sale is out-of-state, you do not have to collect sales taxes.
If I am claiming income from my artwork sales, can I deduct part of my rent from my taxes for a home studio?
Probably. Artists can deduct for a home office/studio, if there is space that is used exclusively for the production of art. In most cases, this means a separate room, with its own door, or a basement that doesn’t share the space with a washing machine or a fitness machine. Check out IRS form 8829 for a worksheet and explanations: www.irs.gov/pub/irs-pdf/f8829.pdf
I have a part-time job, and I receive a W-2 from and pay taxes through that job. Do I still have to file separately as a business if I sell a few paintings?
Yes, if you get more than $450 for your sales (total), you are still considered to be self-employed, and you are responsible for taxes on that income. Consult the IRS’s information center for self-employed and independent contractors: http://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed
Is a grant taxable?
Yes. Your grant funds are probably considered taxable income. However, an academic scholarship from PAFA is not normally considered taxable income.
If I complete a residency, is it taxable?
Any stipend accompanying a residency is probably taxable.
What if galleries and art markets ask for my Social Security Number for 1099s? I'm uncomfortable giving it out.
You can apply for an Employee Identification Number (EIN) from the IRS, and you can supply this number to anyone who is reporting income for tax purposes. The process is free, and you can get the form at www.irs.gov/pub/irs-pdf/fss4.pdf
Can I deduct expenses for art supplies while I am a student?
I have a website and blog for keeping in touch with friends about my work, and I generate a little money by putting ads on the site. Do I need a Business Privilege License?
Yes. The City may require a Business Privilege License for almost any type of commercial activity you do in Philadelphia—this could include everything from a freelance graphic design job to setting up a booth at a craft fair. See their publication: http://business.phila.gov/Pages/BusinessPrivilegeLicense.aspx?stage=Star...