Judge Overturns IRS on Artist Tax Deductions

Posted by Mostafa Heddaya on October 7, 2014 at http://hyperallergic.com/153951/judge-overturns-irs-on-artist-tax-deductions/

A ruling by the United States Tax Court last week held that an artist employed as a professor could still claim tax deductions on her independent output, the New York Times reported. The case, which centered around Hunter College professor Susan Crile, affirmed that the right to claim an Internal Revenue Service (IRS) income tax deduction on expenses related to your status as a professional artist is not jeopardized by low sales or other full time employment (in this case, teaching). The IRS had argued that Crile’s claim to be both an artist and a teacher was an “artificial” distinction, since her work was produced as a corollary of her full-time job, not as an independent avocation, and could therefore not be grounds for deductions.

Though the ruling ultimately only affects a small number of artists — artists who teach or have another form of primary employment whose duties involve making art, while at the same time producing and selling art independently — Crile’s success in claiming the deduction cements, by some accounts, the tax security of artists. Yale School of Art dean Robert Storr told the Times that the right to claim deductions on such expenses was “one of the last remaining areas where the federal government cuts artists any slack to allow them to do what they do.”

Though a good deal of successful artists are also full-time academics, including some who earn much larger sums than Crile, it would appear that the Hunter College professor’s case was unique. And although she made relatively little off her politically-inclined prints and paintings on an annualized basis (just under $16,000 per year from 1971 to 2013), her career earnings of $667,902 still place her at the top of the financial echelon of working artists. That the IRS initially refused to allow her to claim deductions on this work, which has been collected at the Guggenheim and Metropolitan Museums, among others, seems ever the more strange, and the success of her defense all the more justified.

Published by

Michael Grodsky

Michael Grodsky, AIF, is founder of Artist Insurance Services, providing unbiased education and access to health insurance for Californians. He is a board member for Side Street Projects, a nonprofit artist-run organization, and is an insurance and financial planning specialist for GYST, an artist-run company providing information and technology solutions for artists. Michael’s Health Insurance 101 workshops have been hosted by non-profit organizations throughout Los Angeles County. He leads the ‘Health Insurance 101’ monthly informational workshop at the Cancer Support Community-Benjamin Center.