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State Income Taxes....

Posted by Jan Raven on March 28, 2011 at 6:16pm in Business of Art Fairs

So!  Anyone else brave/foolish/honest enough to fill out income tax forms for all the states in which you earned income?  This is the first year I am attempting to do so, and to be honest, I am not sure I'll finish.  What a major PITA!!!  So far two states have been quite easy (CO and IL), but WI is making me tear my hair out.  There are seven states for which I should file forms.  I think I will limit myself to one every other day to keep my sanity.  Anyway, just curious to hear other people's perspective on this.  

 

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Tags: income, state, tax
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  • Kristin Perkins March 29, 2011 at 10:45am
    This is a good topic and I had never considered that I would owe income taxes to states in which I did art fairs. I called all three states and was told yes for Illinois, no for Maryland, and no for Ohio.
    • Geoff Coe > Kristin Perkins March 30, 2011 at 11:04pm
      That's interesting: I was accepted to the Art's Alive show in Ocean City MD this week, and the artist info packet specifies that  artists must register with the state, collect, and remit MD sales tax.
      • Geoff Coe > Geoff Coe March 31, 2011 at 8:50am
        MEA CULPA:  I mis-read the question (thought it was a "sales tax" question). MD does NOT ask about income tax. Please ignore my response since the site does not permit me to delete my own posts.
      • Michael Reimer > Geoff Coe March 31, 2011 at 8:44am

        Geoff - You are confusing sales tax and income tax.  You collect sales tax for the state when you sell an item and send that to the state.  The sales tax you collected was never your money and the calculation is strictly based on the sales price of the item times the tax rate in the location you make the sale.  Income tax would be calculated considering sales minus expenses.  You pay income tax on the net.

        Paying income tax in a state outside of my residence seems confusing since you don't know your tax liability until you consider all expenses for the year.  I don't do shows outside of my state, so I don't have to worry about that.

        • Lynda Wallis > Michael Reimer March 31, 2011 at 10:31am

          Nice clarification.

          Yahoo...more to remember, more paper work.

           

           

        • Geoff Coe > Michael Reimer March 31, 2011 at 8:49am

          Hi Michael,

          Sorry, I misread the thread.  I'll delete my post since I don't want to confuse the issue for anyone who reads this later. 

  • Jan Raven March 29, 2011 at 12:41am
    Who needs to pay H & R Block when you have Google?  It turns out that some states have no threshold (AR and CO), while the threshold for others is well below my earnings for each state, so I must file with all of them.  EXCEPT for Michigan, which has a reciprocal agreement with Minnesota.  Yay.  One less set of forms to fill out!
    • Linnea Lahlum > Jan Raven March 29, 2011 at 2:30pm
      Jan, what google search terms did you use to find this info? Thanks.
      • Jan Raven > Linnea Lahlum March 29, 2011 at 3:11pm

        I started out with something like "threshold for filing state income taxes" but found that the best course of action was to visit the revenue/tax web page for each state and look for the FAQ page.  Then I looked for anything about "Filing Requirements" or "Information for Part-Year and Non-residents."

        I find it interesting that many of my fellow artists have not considered income taxes; I thought about it right away.  If you file sales tax forms then it is at least possible that the state "knows" you have done business in the state and should be liable for income tax.  I could rely on the improbability of the income tax division "knowing" what happens in the sales tax division and ignore the whole thing, but states seem more desperate for income these days, and perhaps will be more rigorous about enforcement.  I'd rather deal with the inconvenience now when I have a bit of free time rather than later in the summer.   Has anyone out there been caught not paying income tax?

  • Jacqueline Webster March 28, 2011 at 10:54pm
    You know, I used to think that H & R Block was overpriced, but since I started doing shows I've decided they're worth every penny.  The best part is when our preparer looks up each state and tells me where I don't have to file because I'm below the income threshold for that state.  You might be below the threshold in some places as well.  If you can scrape together the money it might be a good idea to get some help.
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