Is Selling Art Tax Free?

Taxation of Art Sales

• The art sold is taxed up to 39.6%.
• Selling art is taxed up to 39.6% of profit.
• Gains are taxed like stocks.
• Both hobby and business art sales are earned income.
• Art dealers pay income tax like retail stores.
• Some expenses are deductible under rules.
• Goods taxed at 28% include tiles and heaters.
• Collectors avoid taxes by adding to collections, not cashing out.
• This is legal.
• Exchanges let collectors trade untaxed.
• Use tax applies when art bought in one state is shipped to another.
• Selling fan art without consent is illegal.
• Online sales tax applies when buyer and seller are in the same state.

Tax Implications for Art Sales

• Steps: document income and expenses; file taxes quarterly.
• If expenses exceed income, IRS sees it as a hobby.
• If under $400 in income, hobby artists avoid self-employment tax.