Do You Have to Charge Tax on Internet Art Sales

Equally an artist, the ultimate dream is to sell your art to others. This is a joyous time! It'due south also a financial transaction. What do you need to know virtually your auction of artwork and sales revenue enhancement?

Note that the BVAA primarily operates in Massachusetts. The advice given is from a Massachusetts bespeak 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 photo across a yr you owe sales tax to the State of Massachusetts for that sale. Even if you sell just one bin-art print for $xx, you owe sales revenue enhancement.

Massachusetts Sales Tax Guide

Applying for a Vendor License
If you e'er sell at festivals or shows where you lot take a table gear up up for you lot then you technically need a vendor license. Even if y'all have a bin out with your piece of work that would apply. If you ever work with businesses paying you it'south a good idea to have that vendor license. In any instance, it's easy and free to get the license so information technology's well worth information technology. You then get an online interface to file your sales tax.

The place to go your Vendor ID and to and so file your sales revenue enhancement numbers is here –

https://mtc.dor.state.ma.u.s.a./mtc/_/

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

If the only time you sell fine art is a one-off situation where a person emails you directly and asks to buy something, and then yous can get with filing your sales tax on your normal taxes each April. Yous wouldn't demand a vendor license in that state of affairs.

Sales < $1600/yr
If, beyond an entire yr, y'all only owe $100 or less from sales tax, yous simply need to file annually. That would exist from earnings of $1,600. If that is all y'all 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 [nether $1600/yr] who are non registered vendors may file Grade ST-10 (Business Use Tax Render) or Form ST-11 (Individual Use Revenue enhancement Return). Both returns are due annually by April xv. Alternatively, individuals may report and pay any Massachusetts apply taxation due on their personal income tax return, Massachusetts Resident Tax Return (Grade 1) or Form one-NR/PY for part-year residents, or WebFile for Income.

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

Sales Tax Filing Guidelines

There is never a situation where you lot earn coin from a sale and you do non incur a tax brunt for it. If y'all are paid money for the sale of artwork you owe sales revenue enhancement on that sale. This includes photographs, paintings, and prints. That is the bottom line of Massachusetts law.

Notation that, every bit an creative person, you lot tin claim tax credit for the items you employ as function of creating your art. You can get revenue enhancement credit for your brushes, paints, cameras, ink, newspaper, and everything else you use to create your concluding production. Y'all go credit for those items in the yr that you purchase them. These purchases tin can easily offset the burden of your tax payment. Nevertheless, you have to make sure you lot file for those expenses. Yous are the Sole Proprietor of your artistic modest business. Ideally y'all want to set 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 piece of cake.

Important – from the Massachusetts revenue enhancement 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 upwardly to five years. Willful failure to collect and pay over taxes is likewise a felony and is punishable by a fine up to $10,000 and/or imprisonment for up to 5 years.

The bottom line is – pay your sales taxation on things you sell! And so properly deduct the price of your raw materials and supplies on your income revenue enhancement each twelvemonth, to offset that sale. If you lot maintain a separate account it'south quite straightforward to run across at a glance exactly what you lot've earned and spent in a given year and handle the taxes based on that.

I highly recommend yous set upward an Excel Spreadsheet or notebook or SOMETHING at the get-go of the year. Each time you make a sale, jot a note of what you sold, where, and for how much. That makes the stop-of-year reporting but and so much easier.

Pricing Your Artwork
Technically, yous're supposed to price your artwork as the base price and And so add the sales tax on top of that at the payment phase. However, nigh no creative person I've seen at art shows does that. Instead, what they traditionally do is show the price including the sales taxation in it.

So, for example, if I sell a impress for $twenty including revenue enhancement, that ways that the base cost of the artwork is $18.82 and the sales tax of 6.25% was $1.eighteen. $18.82 plus $1.xviii equals $20. How did I figure that out?

I divided 20 / one.0625. That is, I divided the total sale price past the number i plus the sales taxation rate (in this case .0625). And so if you're in Massachusetts, just divide your item's cost by i.0625. Y'all'll become the base of operations cost of the detail. If you subtract that from your total sale price, whatever is left is the sales tax. Any calculator volition let you divide your total price by ane.0625. The calculator will so let you subtract that base of operations toll corporeality from your full price.

Artwork Cost: $xx
Base Artwork Toll: twenty / 1.0625 = 18.82
Sales tax: 20 – 18.82 = 1.18

And then if yous wish, you lot tin put those numbers on every sales tag you use in the shop.

Note that the Mass website instructs: the taxation must exist separately stated and separately charged on all invoices, bills, displays or contracts – https://www.mass.gov/guides/sales-and-utilize-revenue enhancement – so you should at least make sure you put the base price, sales tax, and and then whole total on any receipts you give out. Some artists don't use cost tags at all and handle that verbally with each potential buyer. So this would be a case where that receipt is important, to prove the breakout.

You can keep a chart by your cash box which contains all your standard prices ($10, $15, $20, etc.) and what the matching sales tax is for each one. That way you tin can easily create the receipts.

I highly recommend having a three-role receipt book equally part of your art supply set. That way y'all ever continue a difficult copy of each sale made with all the details of it. That likewise means the buyer goes home with a receipt, which they can find helpful.

Summary
It's a legal requirement to collect sales tax with each auction of artwork. The penalties are fairly substantial. It is free to fix up the online account and you but have to report once a year unless you sell like gangbusters. It's easy to report. It's a good idea to set up up a tracking system so this becomes an easy, normal part of your fine art system!

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Source: https://bvaa.org/how-to/artists-and-sales-tax/