Fun fact: 14% of my income in 2015 from freelancing. I had several W2s and a 1099. I'm proud to say that I supported myself completely through dance related work.
I recently sat down with my local tax filer who works with artists in Philly and I attended a workshop hosted by the Leeway Foundation with the goal of better understanding how I can responsibly file taxes with so many streams of income (that's a post coming later).
Smith wrote an amazing article for the Dance Journal in 2013 that goes into more detail-check it out! She truly specializes in financial literacy for artists.
Disclaimer: I am by no means an expert on filing taxes. My goal is to help my peers and young artists in beginning to develop habits for fiscal health. Any questions should be directed to your local tax filer. Seek a tax filer who works for artists. They understand our needs and lifestyle better than the average tax filing company.
Are you a recent graduate new to filing taxes? Here are some helpful tips to get started:
Report your income. ALL of it. Anything that isn't a W2 goes on your Schedule C, which the IRS recognizes as self employed income. You know you need to report income on your Schedule C any time an organization asks you to complete a W9 upon hiring. In tax jargon this makes you the sole proprietor, also known as an independent contractor.
Have you been awarded a performance stipend? Report it. Go through your planner from the past year so that you remember to include guest assignments. You establish yourself when you show that you are earning considerable income from your art!
Keep track of all of your business expenses. They get deducted from your net income on your Schedule C and you're taxed on the profit. A business expense is any investment made to maintain your craft and further your career. All professional development counts.
What do I deduct? Here are some examples: Business cards, bus tickets to NYC for performances and auditions, classes and workshops, head shots, your website domain, and any project expenses like renting space for rehearsals and paying your artists. If you have a home office, you can report it as a deduction. Your tax filer will guide you through this process.
Keep track of your transportation. A portion of your bicycle and car expenses can get deducted on your Schedule C. Are you biking to your freelance gig or flying to a city for a performance? Report those expenses. You'll hear the phrase, "write it off."
I like to keep physical receipts in a coupon pouch and I put a "Receipts" label on any purchase confirmations I get in my email.
As an artist, YOU are the expert on what it costs to sustain your craft. You are your own small business. Separate your personal and business expenses so that your personal funds don't co-mingle with your artist income and expenses. You can begin by opening a business checking account at your bank of choice. Then you can pay yourself!
I'm learning as I go. Write to me if you want to hear more about my personal experience in Tax Hacks!