U.S. based artists - how do you expense Daz on your taxes?
RiverMissy
Posts: 318
in The Commons
If there are other U.S. based artists that are making money with their art, I am curious as to how you expense your Daz purchases. Yes, like many others I spent too much money on Daz in 2019 and I am trying to come up with a way to expense it over time into the future since I will most certainly be making more money in the years to come with my art :).
Thanks.
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If you are making any kind of real money, save every single receipt, and hire a tax attorney. I was working for years before I hired one, I didn't know how much writeoffs I was missing out on until I got a tax lawyer.
Well you can always sell content purchased earlier privately by yourself to your company, and write it off that way. At least we can where I am.
I think it would more be a case of the company repaying you for the assets you bought. I don't think licensing here allows companies to own the rights to use a product, only individuals.
Well for a start you should make sure that you use the correct names Daz is the Company Daz Studio or DS is the program you use to create your art. So you buy thing from Daz or Daz 3d and use them in DS.
So your "My DAZ 3D Gallery" shown in your sig, does that refer to your works for Daz the company or Daz Studio the software?
I mean, shouldn't it say "My DAZ STUDIO Gallery", going by what you said above?
Chohole only uses Bryce I believe, so I don't think "My DAZ STUDIO Gallery" would be a very good name.
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True! I don't think Chohole uses DS to make any images/art. Calling it "My DAZ 3D Galley" is essentially the same as sayng "My Gallery at DAZ 3D", and makes no reference to anything used to make the images for the gallery at DAZ 3D.
No because I don't use Daz Studio, I have another Gallery, if I linked to that I would link to My Renderosity Gallery.
I was thinking of "Sole proprietorship" which probably covers most PAs and people here using content in a business context: "A sole proprietorship, also known as the sole trader, individual entrepreneurship or proprietorship, is a type of enterprise that is owned and run by one person and in which there is no legal distinction between the owner and the business entity. A sole trader does not necessarily work 'alone'—it is possible for the sole trader to employ other people."
https://en.wikipedia.org/wiki/Sole_proprietorship
In this case, if there are "other people" employed only the company owner is using the content, of course.
This. There are way too many catches and loopholes in the tax laws for anyone except a full time professional to keep track of them all, but if you can't afford an attorney, at least go to a tax preparer like H&R block and have an actual human look over your numbers.
Also, your first step is to determine if you're writing things off as a business or a hobby. https://www.irs.gov/faqs/small-business-self-employed-other-business/income-expenses/income-expenses ; You CAN deduct some things for a hobby, but fora business you need to document as much as you can about what you buy for 3D... not just DAZ and Rendo assets, but also drives for storage, new computers, subscriptions to software like Photoshop, paid memberships like PC+ and Prime, fees for art related sites, and the cost any books, magazines or DVDs that are vaguely related to your work. I have actor friends who write off many of the the clothes they buy, their haircuts and skin treatments, and every movie ticket they buy (research.) Of course, you can only deduct as a hobby as long as you actually make some money in a field you're working that can somehow be linked to your DAZ expenses. Iif you can't come up with anything else, print your own holiday greeting cards using your own DAZ generated images to send to your best customers.
Thanks for all the suggestions. To clarify I have a real sole proprietor business that I have had for many many years so the assets are tax deductible since I am using them to generate income. I am just pondering how to categorize them and was trying to see what other people have used. Thanks.
Schedule C. *shrug*
Seriously, the Standard deduction for Single or Married filing jointly in 2019 is over $12,000.
https://www.irs.gov/newsroom/irs-provides-tax-inflation-adjustments-for-tax-year-2019
Good luck itemizing over $12,000 and having your pay, were you paid for that work, but you won't be, for time spent on the itemization work not exceeding the trivial increase by a large margin, if any, tax write off you'll probably won't get for all that work.
Yes, we are talking Schedule C. I was doing round one on my taxes. I have other income and am working on growing my income from art. It's all good.
Do you use your home for business? There is a simple business deduction you can take. I sell art and photography on the side and a portion of my home is a dedicated studio: https://turbotax.intuit.com/tax-tips/small-business-taxes/the-home-office-deduction/L1RZyYxzv
Hi Mwokee,
Yes, I used the simplified home office formula last year. It was really close to the actual so why not. I use Taxact for my software. I have had better luck with it doing tricky things through the years.
It's fairly easy once you figure it all out. I do the simpe business deduction and write off Daz and related purchases. But it helps when the girlfriend is a CPA.
Are you amortizing your Daz purchases or writing them off in the year that you purchase them? That is what I am debating since it was such a large amount and hopefully I will be making more money from the art into the future. Thanks.
i list them on my schedule c returns as 'digital assets'.
i take the deduction for the relevant year. i don't try to spread it out.
irs rules for depreciation and amortization are pretty complicated. i'd definitely recommend that you have a good accountant or tax professional if you want to go that route. if you don't keep good books and track your expenses well...i wouldn't even consider it.
also: if you're spending more on your daz assets than you're earning with them in a given year, i'd suggest that you do not try to claim that full amount as a deduction. if you're declaring a net loss for the year, the irs is likely to look harder at your return. and if your business is regularly not turning a profit, the irs is likely to decide that your art does not qualify as a business--it's just a hobby! so no more deductions for you...
good luck!
j
Dear Jardine,
I have had a real business since at least the 90's or before. One can buy something in one year and not make money with it until another year. The art is bought to make money over hopefully many years. One does not have to write off only the art bought and used in a particular year. I do not have a hobby business and never have had a hobby business. This is how I feed myself and pay my bills. One should write off the business expenses associated with a business. I am very good at computers and accounting so this is not outside of my realm of expertise. I was really just trying to find out what others were doing to expense their Daz purchases. I do understand that many people here are buying Daz art for fun and pleasure and not earning a living and that is great! I enjoy what I am making but need to earn money with it also, not a hobby here.
Thank you to everyone for their input!