With taxes being the hot button issue of the new year, it seems as good a time as any to touch on this touchy subject with respect to artists. One area of the tax topic which especially warrants discussion is that of artists being asked to donate their artwork for charitable causes.

In the coming months, many artists will be asked to donate original artwork to a host of worthy causes. It is an honorable thing to do. Yet, the list of non-profits calling can seem endless and I'm not actually sure how many of them realize how often artists are asked to give their work away. But everyone involved should know that beyond materials, such as canvas, paint and a frame for example, artists are not allowed to write off their own artwork.

You got it! Give a painting worth $3,000 for a donation and your time and talent is not recognized by the IRS. Other than to say that it is basically a "gift in kind." Meaning — where time and services are donated, IRS Publication 526 states, "You cannot deduct the value of your time." In other words, your donation simply becomes a gift, out of the kindness of your heart and/or a very expensive promotional item. Far more so than most forms of advertising, which by the way, you can write off 100%. It is my understanding that it was not always this way. A 1969 change in the tax code put this seemingly unfair practice in place and art advocacy groups have been fighting to change it ever since. Good luck now.

Interestingly enough, if a person purchases the painting from you and they give it away, they can write off the whole thing and I think even for any appreciated fair market value. I suppose under the premise that they paid for it. But what if they got the painting as a gift or purchased it for less than its actual retail price in a poorly attended auction situation and then donated it for its full value a year later?

The purchaser should know though, that if you purchased art or anything for that matter at an auction, only the amount you may have paid over its actual value would be tax deductible. It is just a purchase, you got something for your money. Your money was not a donation. So, pay $2,000 for a $2,000 painting — no write off. Pay $2,500 for a $2,000 painting — you get a $2,000 painting and a $500 write off.

Now I want to clearly state that I am not an accountant or a CPA and anyone that has questions pertaining to their own situation on this topic should, as I have, seek the advice of their professional. That said, if there is a CPA reading this that has other information, please share it with me and I will be "very" happy to hear it and share it with others. Tickled pink in fact.

So, where does that leave artists? I must admit, I hear from artists all the time about being asked to "give" artwork, when many are just getting by themselves. It would seem under the tax write off reality, or lack thereof, that there could be some mutually beneficial arrangement by sharing some portion of the proceeds, even if small. I truly believe artists want to help their communities as much as anyone. But with no compensation or even a tax write off, everyone should know it can be tough to give your livelihood away.

That said, artists will have to balance these gifts as personal business decisions. For the purpose of this article, I will share that in 2012, I personally gave a very substantial amount of my paintings for what I feel were good causes. I had to justify sound reasons for each and feel good about my decisions and I'm sleeping just fine. Still, I do think many non-profits are unaware of the tax code and dare I say, the livelihood of artists, when they ask artists quite easily for what are almost always very expensive gifts.

For artists, here are a few tips. First, I highly recommend that before the year gets underway, that you speak with your accountant about your personal tax situation. Second, if this type of giving suits your sense of community, just have a plan. This plan should outline organizations that you are passionate about, but they "may" also be those which have high promotional value to you as an artist. Third, in fairness to yourself, understand art is not really a consumable product. Collectors do run out of room and most auction items are either consumable, as in the use of a vacation home, a discount of such and/or many personally donated items which can be written off. But again, you can't personally donate your own "created" art and write it off. You can donate other's art you purchased. Fourth, also understand there are many ways to support a good cause without giving art. You can advertise in their program, give personal items and volunteer your time.

Finally, as it is said, to give is to receive. So, if it is right for you to do so, do so and know giving your creativity is a wonderful gift indeed.

Live An Artful Life.com
Tom