Amy Smith explains the finer points of bookkeeping.
On November 15, Amy Smith (Pew Fellow, 2006) led a financial skills workshop for fellows here at the Center. A choreographer and cofounder of Headlong Dance Theater, Smith says she taught herself how to understand bookkeeping, budgeting, tax preparation, and financial management. "It is my personal mission to help other artists increase their financial literacy, get control over their personal finances, and only pay as much in taxes as they actually owe (not more).”
Here are a few financial tips for artists from Smith:
- Segregate personal expenses from art-related ones with a separate checking account.
- Spend money on deductible expenses that improve your artistic life. Don't scrimp on materials or doing research visits to museums, etc. Those things are deductible!
- Don't be afraid to claim as many art-related expenses as you can as deductions on your Schedule C. Ask yourself: Would I be spending money on this item or experience if I did not have a creative practice? If the answer is no, you can probably deduct it—and spend that money out of your art account so you can easily track it come tax-time.
- Be careful not to take a loss from your practice year after year. This not only leads to burnout and unsustainability, but the IRS may flag your return under the "hobby loss provision" and say your artwork is a hobby, and thus the expenses become non-deductible.