Artists excel with imagination, but you can't take creative liberty when it comes to taxes. As a DJ, Etsy seller, or freelance designer, you need to file both state and federal taxes, as well as 1099 forms.
Generally, artists file a “Schedule C” as part of their regular 1040 income tax form, which is where they report their art income and expenses. They may file a form 8829 for the home office (studio) deduction and which will also require them to pay self-employment tax (Schedule SE) on their net income, as well as federal income tax. All these forms are part of the 1040 income tax filing.
As a self-employed artist, you will usually be required to pay estimated quarterly taxes using Form 1040-ES if your Federal tax liability is over $1,000 for the year.
People that pay quarterly taxes - like self-employed individuals and freelancers - don’t have taxes withheld from their earnings, so they need to pay taxes to the IRS throughout the year. These taxes are used to pay Federal income tax, state income tax, self-employment tax, social security, and Medicaid/medicare.
Quarterly taxes can seem daunting at first, but don’t worry — there are some ways to lower your taxes. Unfortunately, the IRS doesn’t provide a list of small-business tax deductions for every profession. However, it allows self-employed people the ability to seek deductions on anything considered “ordinary and necessary” to run your business.
There are several tax deductions available for self-employed artists — you can deduct travel, meals, inventory, vehicle and transportation costs, equipment, art supplies, home studio expenses, legal and professional fees, gallery costs & commissions, and more.
Let's glance through some of the common deductions available to artists:
Travel & meals
As an artist, you can deduct any and all expenses associated with business travel. This can include meals (Now 100% deductible), hotel & lodging, reasonable tips, dry-cleaning, phone calls home, etc. Travel could include expenses related to gallery visits, openings of shows, delivering artwork, and art fairs.
If you pay for business insurance, keep track of your payments and write them off come tax time.
Any money you spend on promoting your work can be deducted. Advertising expenses can include print ads, business cards, fliers, sponsorships, Facebook and digital ads, as well as your website hosting and creation costs.
Equipment & art supplies
Any equipment needed to perform your job is usually counted as a deductible expense. You can deduct the cost of materials and supplies consumed and used during the tax year.
As an artist, if you happen to have your art studio in a spare bedroom of your home, you can claim the home office deduction. However, the IRS insists that any studio you claim is used exclusively for your art business, so you have to prove that's where you do most of your work. The deduction amount relies heavily on how much of the house is devoted to your artistic work.
Automobile & Vehicle Expenses
If you travel for business, you can deduct mileage. This can be a huge deduction for artists or any kind of freelancer!
To benefit from this particular tax deduction, you need to track your mileage. Any sort of distance covered for business or freelancing can be part of your business mileage deduction. You can also claim a percentage of all your car-related expenses, like repairs or depreciation.
Both deductions will help you reduce your taxable income — however, the mileage deduction requires you to maintain a mileage log. Car expenses usually consist of multiple deductions, which you can use to your advantage. . Mileage deduction will be preferable if you drive a lot.
Below are some reasons why you might want to select the mileage deduction:
Some other unique deductions include museum and gallery tickets, streaming music and video subscriptions, magazine subscriptions, digital services, art and photography books, etc.
However, it is advised not to get greedy with these types of deductions since they can trigger an IRS audit. However, as an artist, you are allowed to claim these deductions since you need to keep up with trends in your profession.
Most tax preparers call it "research," but be prepared to justify it. In any case, do not deduct every book or art show you attend in the year; since they all can’t be "research."
Now, when it comes to paying quarterly taxes, there are a few things to keep in mind.
Quarterly tax due dates come around like clockwork, four times a year, but remembering to pay these taxes can be tricky even for seasoned freelancers.
To make sure that you pay the correct amount of estimated taxes, you have to keep tabs on your expenses. You can use tax engines like FlyFin A.I., which automates your quarterly tax payments for every quarter, and not just at the end of the year. This app allows you to track expenses and income on an “ongoing” basis, thus making your quarterly taxes much easier and more accurate.
There are many quarterly tax calculators on the web but they are highly imprecise. It’s important to use an accurate one so you don’t overpay. You also don’t want to underpay and accrue steep penalties, not to mention getting “red-flagged” by the IRS!
Generally, the IRS’s Estimated Tax Worksheet within Form 1040-ES (for individuals and freelancers) and Form 1120-W (for corporations) are used to figure out the estimated tax payments. The form will help you figure out the amount you’ll owe for the year. Take that number, and divide it by four (quarters), and pay in equal installments before the tax due dates. Or, you can always let the software and apps handle it for you.
Once you’ve calculated what you owe for each quarter, all you need to do is to file Form 1040-ES. You can send estimated tax payments with Form 1040-ES by email, or you can pay it online.
Some of the other payment methods include:
You can also rely on FlyFin’s quarterly tax calculator, which automatically calculates your taxes, and allows you to pay directly to the IRS with just one click.
FlyFin AI automatically finds every deduction that applies to you and your profession. All you have to do is answer a few basic questions and A.I. will accurately calculate your quarterly tax payments. The entire process takes less than five minutes. Even better, you get to consult a CPA to prepare your quarterly taxes for free.