Artists and Sales Tax

As an artist, the ultimate dream is to sell your art to others. This is a joyous time! It’s also a financial transaction. What do you need to know about your sale of artwork and sales tax?

Note that the BVAA primarily operates in Massachusetts. The advice given is from a Massachusetts point of view. If you live elsewhere, you’ll want to consult local laws.

The sales tax rate in Massachusetts is 6.25%. This applies to all tangible property. Art – including paintings, photographs, and sculptures – definitely falls into this category. Even if you just sell one painting or photograph across a year you owe sales tax to the State of Massachusetts for that sale. Even if you sell just one bin-art print for $20, you owe sales tax.

Massachusetts Sales Tax Guide

Applying for a Vendor License
If you ever sell at festivals or shows where you have a table set up for you then you technically need a vendor license. Even if you have a bin out with your work that would apply. If you ever work with businesses paying you it’s a good idea to have that vendor license. In any case, it’s easy and free to get the license so it’s well worth it. You then get an online interface to file your sales tax.

The place to get your Vendor ID and to then file your sales tax numbers is here –

https://mtc.dor.state.ma.us/mtc/_/

It’s all straightforward and online. You report how much you sold in total for the time period (usually the previous year). You figure out what the sales tax on those sales would be. You pay it and you’re done.

If the only time you sell art is a one-off situation where a person emails you directly and asks to buy something, then you can go with filing your sales tax on your normal taxes each April. You wouldn’t need a vendor license in that situation.

Sales < $1600/yr
If, across an entire year, you only owe $100 or less from sales tax, you only need to file annually. That would be from earnings of $1,600. If that is all you owe, you can do that on your normal tax form in April. If you have a vendor license, you file that payment amount online once a year.

From the Mass.Gov page:
Businesses and individuals incurring use tax liabilities [under $1600/yr] who are not registered vendors may file Form ST-10 (Business Use Tax Return) or Form ST-11 (Individual Use Tax Return). Both returns are due annually by April 15. Alternatively, individuals may report and pay any Massachusetts use tax due on their personal income tax return, Massachusetts Resident Tax Return (Form 1) or Form 1-NR/PY for part-year residents, or WebFile for Income.

 

Sales > $1600/yr
If you owe $101 to $1200 a year you need to file quarterly. If you owe $1,201 or more in a year you have to file monthly. Those filings can be done online. Details –

Sales Tax Filing Guidelines

 

There is never a situation where you earn money from a sale and you do not incur a tax burden for it. If you are paid money for the sale of artwork you owe sales tax on that sale. This includes photographs, paintings, and prints. That is the bottom line of Massachusetts law.

Note that, as an artist, you can claim tax credit for the items you use as part of creating your art. You can get tax credit for your brushes, paints, cameras, ink, paper, and everything else you use to create your final product. You get credit for those items in the year that you purchase them. These purchases can easily offset the burden of your tax payment. However, you have to make sure you file for those expenses. You are the Sole Proprietor of your artistic small business. Ideally you want to set up a separate, free checking account for the artistic projects and ensure those art-related incomes and expenses are tracked separately. That makes the process simple and easy.

Important – from the Massachusetts tax page: Willful evasion of taxes is a felony punishable by a fine up to $100,000 for individuals or $500,000 for corporations and/or imprisonment for up to five years. Willful failure to collect and pay over taxes is also a felony and is punishable by a fine up to $10,000 and/or imprisonment for up to five years. 

The bottom line is – pay your sales tax on things you sell! Then properly deduct the cost of your raw materials and supplies on your income tax each year, to offset that sale. If you maintain a separate account it’s quite straightforward to see at a glance exactly what you’ve earned and spent in a given year and handle the taxes based on that.

I highly recommend you set up an Excel Spreadsheet or notebook or SOMETHING at the beginning of the year. Each time you make a sale, jot a note of what you sold, where, and for how much. That makes the end-of-year reporting just so much easier.