Income Tax

Date: Tue, 16 Mar 1999 19:10:06 -0500
From: "Stephanie Stussman"
Subject: Re: illustration: sales tax

"Yes indeed... and here in Seattle it's important to make less than $50000 a year... cause at the 50k mark, then all of a sudden there's a $1000 or so city tax that kicks in...(in addition to all the other taxes).... gotta buy the Mayor a new computer or something."

That sounds similar to what we have here. We live in NJ, but my husband works in NYC. For the priviledge of doing so, he has to pay an extra city tax that NY dwellers do not. Gotta buy the mayor some new pedestrian blocking baracades...


Date: Tue, 16 Mar 1999 19:21:56 -0500
From: "Stephanie Stussman"
Subject: Re: illustration: Federal & State Tax payable

"If any ONE company pays you $600 or more in a year then that company must file a 1099 with the Federal government saying that they paid you $600+. You receive your copy of that 1099 to include with any other forms showing income (like W2s). If you don't claim that money you earned where you received a 1099 then eventually the feds will get you."

It doesn't even have to be that much--at least in NY State. I've worked $300 jobs and had to pay taxes. I've never gotten a business liscence or tax number (I don't do much of any freelance work yet). The company just usually puts me on their payrole as a temporary employee, and I fill out the W2. Perhaps it is different for working for theaters rather than publishers. <0> Steph:0)

Date: Tue, 16 Mar 1999 19:34:51 -0500
From: "JiveMaster"
Subject: illustration: Tax Stuff

I'm not sure about everyone else's state, but here in Ohio I can get some tax breaks. For example. All my computers and art related things are in one room, nothing else in that room except my stuff for my business.

Because of this I can get deduction or whatever the term is called, they go by square feet of space. But say working at the kitchen table won't work because you also eat there. It has to be used for nothing but your work.

I also get to take a percentage of my phone bill, electric bill and all the other bills. My wife and her father are accountants so thats how I found out about it.

I am responsible for my own taxes though. I registered my business name with the state. At tax time I am responsible for paying all the taxes. After your first year of business you are required to pay an estimate sales tax at the beginning of the year. You say OK, this is how much I think I will owe, then pay it.

At tax time then you will know if you need to pay more or if your getting money back. I don't know how it all works technically, I let my wife do that. I don't have a tax id or anything but I am going to get one sometime.

I have to keep track of all my clients, (but who doesn't) When they pay me, I have records for everything.

You could probably find out if your states do this stuff. I am sure they do but don't tell you :)

OH yeah, here is something else you have to think about. For example, my web site has sponsors, I have received free computers, software, you name it. I have to claim that, its called barter tax or something to that effect.

Shawn Augustson

Date: Wed, 17 Mar 99 09:14:08 -0500
From: Mark Cable
Subject: Re: illustration: taxes and stuff...

"A couple of years ago, I was a semi-finalist in an illustration contest. Part of the prize consisted of a $500 check (which I reported), and the following year winners were flown to a site and participated in several programs, paid for by the sponsor of the contest.

I was more than willing to pay any portion in taxes due because of this, but no 1099 or anything else was ever forwarded to me (even after I asked the contest administrators, and the husband of another contest winner).

Anybody ever deal with anything like this?"

Yes, prizes are handled differently. They aren't reported on 1099's, but on a separate form of some sort. I also think the threshold for reporting prizes is higher than that for income, I don't know why.

- -Mark

Date: Wed, 17 Mar 1999 13:56:24 -0700
From: "Helen Lannis"
Subject: illustration: Taxes & Stuff


I've been following the tax discussion in the list & I have a couple of additions.

A few people have said this, but only in are required by law to pay income tax on ALL income, unless you earned less than the minimum income (for all of your income, not just art-related) It doesn't matter if you got a 1099 or not (you don't even send that form in with your taxes, by the way!) What many people do to avoid taxes is to get paid cash & then not deposit it or report the income. This is still illegal. I don't mean to be a bummer, but you need to declare your income.

Here's a nice thing, though: you declare your income in a "profit & Loss" schedule C. Look at this form. It has many deductions for supplies, books, etc. These are costs of doing business and are deductible. Personally, I avoid doing the home office deduction, since I own my house & home offices depreciate the space you are using.

Note, too, that you don't have to register anywhere to file this schedule C with the IRS. Sole proprietors can simply use their own name & file. The only potential problem is that the IRS will want you to show a profit in 2 out of 5 years, or they will declare your art business a mere hobby. (Which limits your deductions to only the amount you take in. New businesses need to show they are attempting to create income, not just creating a DEDUCTION)

I'm not a tax lawyer or accountant, but I've been doing freelance design & illustration for years. This is the basic approach taken by my accountant. He tells me what I can deduct & what I can't...keeps me ok with the IRS.

OH!!!! Why isn't the sale of artwork to publishers treated the same way a wholesaler is? That is, when a wholesaler purchases goods, she doesn't pay sales tax because she is reselling it. At the point of sale, she collects the sales tax???? It seems to me a publisher is essentially buying the "raw goods" to create a book or magazine, thus should not be charged sales tax. You would need their tax ID number to declare this info to your taxing authority. Will this fly??? I'm not sure. Any ideas out there?

Date: Tue, 16 Mar 1999 18:50:42 -0600
From: Eric & Sherrie
Subject: Re: illustration: Tax Stuff

What is the deadline for a publisher to send you a 1099. Do they have to send you something by a certain date every year?

Sherrie :)

Date: Tue, 16 Mar 1999 21:54:37 -0500
From: "JiveMaster"
Subject: Re: illustration: taxes and stuff...

I know I should receive 1099's from certain clients yet they have not sent one. Even though they do not, you are still required to claim it, save your butt and let them worry about their own.

Not the same situation really as you but as long as you did your end, that is all you need to worry about.

Date: Wed, 17 Mar 1999 06:01:39 -0800
From: stephanie anne holland
Subject: Re: illustration: Tax Stuff

Hi Sherrie

I treat it like a W-2--that is, if my people haven't sent me my 1099 by Jan 31 (the deadline for W-2s), I'm on the phone asking for it. So far, no one's ever been more than a couple weeks late...

All the best,
Stephanie H.

Date: Wed, 17 Mar 1999 09:12:19 +0000
From: Rodney Schey
Subject: Re: illustration: Tax Stuff

Federal law says Jan 31st....


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