Happy tax season - argh.
It's that time of year again and if you're an artist you may be wondering about your annual tax deductions.
I have been asked on several occasions about artists donating their artworks or paintings to charities. Most artists I know are asked many times a year to donate and it seems most don't understand how to handle the matter on their tax returns.
"Can I claim a donated art piece or painting as a tax deduction?"
Sadly, in almost all cases, the answer is NO.
Uncle Sam does not allow you to claim the retail price of the donated painting - nor does he allow you to claim the final purchase price/auctioned price as a tax deduction. Artists may claim the art supplies used in the process of making the painting/art piece, but that is something you should already be expensing. So essentially there is nothing more you can expense.
Unfortunately many charities (and those amazing souls who work for them) oftentimes don't know this, and they can mislead the artist into believing their donated work can be compensated by means of a tax deduction. I don't believe they are out to intentionally mislead you, they just don't know the laws. This is why it is wise for you to educate yourself before deciding whether or not you want to donate your painting to charity.
You donated an original canvas painting to a local charity. Your supply costs to create the piece were as follows:
CANVAS = $80
PAINT: = $50
PAINTBRUSHES: = $25
OTHER (Varnish, hanging hardware, etc.) = $20
Your total costs to make the painting are $175.
You place a retail value on the painting at $700.
Let's say the donated painting auctions for charity at $1000.
What can you expense on your taxes?
Only the $175 in art supplies.
You cannot claim your perceived value of the painting, NOR can you claim the final amount the painting was auctioned at.
Probably not what you wanted to hear, but let's remember WHY we donated the painting in the first place, right?
It helps to remember that YOU are helping your community, inspiring people with artwork and hopefully getting a little exposure in the meantime. (I know, that dreaded word, "exposure"!)
My advice when asked to donate a painting to charity?
You don't always have to say YES! Be SELECTIVE when choosing which charities are near and dear to your heart. Also be realistic and know that you can't always donate every time you are asked.
Some artists I know offer their works to charities for a highly discounted price, so they can be compensated for their time and talents.
When donating put some thought into the piece you will donate. While it may be tempting to donate old paintings, or ones that have been sitting in a dusty corner of your art studio, I would advise you to choose wisely. Your artwork will be representing YOU! You don't have to choose an expensive piece, but selecting a quality and relevant piece is indeed a wise choice. This is where "exposure" can be of a benefit to you.
Most times when donating paintings I do end up receiving inquiries about my work, and many times that has led to a commission, or sale. Put out good vibes to the universe and she will return them! That's my belief anyway, and it works for me.
Remember, YOU are an ARTIST! Inspire, challenge, CHANGE the WORLD with your artwork, one piece at a time.