Rich Responds - Part Two
Rich continued. It was kind of impressive to see how many ways he could think of to help Art. Art was clearly becoming relaxed, really relaxed.
- You are allowed and expected to deduct your professional expenses and only pay taxes on your “net”. Going forward, you will need that separate bank account AND a tool to help you track your income and expenses (e.g. Quickbooks). Going back, do the bank statements have copies of the checks? Did you pay anything by credit card?
- Worst case, again, we estimate – how much paint do you “consume” in an average painting?
- Other expenses – we can deduct your roundtrip business mileage to NYC. How many times did you drive there? Supplies? Courses? Memberships?
- Is your studio part of your residence? We still may be able to take a “home office deduction” if it qualifies. Or was the studio a separate location? Do you have storage fees?
- What % of your phone do you use for business?
- Do you pay health insurance? That is a deduction.
- How did Katya pay you for your maintenance work? Might you have received a “W-2” for that and had taxes withheld?
- What is your best projection for this coming year’s sales? With artists especially it is always a crapshoot.
- You should plan to save between 30% and 35% of each art sale for taxes, and we will set you up on an “estimated tax plan” for next year.