You must be in it to make money not to reduce your tax!

June --

I am a Full time IT Professional, and part time artist. I've been painting/selling my artwork for many years.

I'm just starting to think about how I can use that to my advantage during tax time.

My question is will your book be useful for me, as I'm not self employed - I have a job, but I'm also an artist? I was wondering if I should create a company to leverage against the income I get from my full time job, or should I just file my taxes differently.

Do you have any information on the topic? I paint dance-themed art. As an artist, can the creative material gathering process be included in a deduction. For example if I go to a salsa event and take pictures so that I can use that material for a painting that I will create? Is there a limit to this? For example I'm planning to go to a dance cruise - take pictures for creative material, network with people regarding my art, and give out business cards, would this be a business expense?

Would I have to become a company first?

Thanks, Alla
Philadelphia PA


Dear Alla,

Read my post, Hobby or Business? If it's fun, be careful. and you will see that in order to have a business and deduct expenses that are greater than your income, then you must have a profit motive. You must want to make money. Tax reduction is not a profit motive.

I also recommend that you read my most recent eLetter, Ways Through the Maze. The column, "Only Suckers Pay Taxes,"answers your question.

If you make money on your painting then you have taxable income even it you treat your painting as a hobby rather than as a business. My book, Self-employed Tax Solutions, explains the difference between hobby and business and also covers the tax and financial basics about being -- or thinking about being --self-employed.

You ask about forming a "company." Do you know what you mean by company? You need to do some homework. Use the search facility on my blog and in my site . For starters search "entity," then "LLC," then "corporation." You don't need to form anything to be a painter in business. You simply have to be doing it fto make money.

Whether you may or may not deduct your creative material gathering depends on how business-like you set up your indie endeavor. Right now, were I your tax pro, I would say no. Ask again after you've read and learned about indie business and decided how business-like you want yours to be.

Good Luck!
June