What you can (and can’t) write off as a creator
To help you get a better grasp on tax deductions for independent creators and creative businesses in the U.S., we've answered common questions.
As a creator, you might have wondered about tax write-offs: What can I deduct? How do tax write-offs even work? Do I need to itemize all my expenses? While here at Patreon we can’t provide tax advice (other than to pay your taxes and find a tax professional you like working with), we are well-versed in how taxes work for creative businesses and how creators can approach their expenses when tax season rolls around.
To help you get a better grasp on tax deductions for independent creators and creative businesses, we’ve compiled the answers to common questions.
What’s the difference between a “write-off” and a “deduction”?
A quick vocab note: You’ll see “write-offs” and “deductions” used interchangeably in this article and in many sources online. In the U.S., these tax terms can mean the same thing. If you are located outside the U.S., it’s worth checking with a local tax expert.
When are creators eligible for business tax deductions?
If you run a creative business, you’re likely to qualify for business tax write-offs. That means you can deduct eligible costs associated with your creative work as long that creative work is part of your creative business.
A caveat: If your creative work is considered a “hobby activity” (more on that in a moment) and not a business, you won’t be able to write off business expenses, but you’ll still need to pay tax on money you’ve made from your creative work.
What’s the difference between a creative business and a hobby activity?
Let’s go straight to the source on this one. The IRS says that “a hobby is any activity that a person pursues because they enjoy it and with no intention of making a profit. This differs from those that operate a business with the intention of making a profit.”
Basically, if you’re creating something and sharing it with others in order to make money, you’re on track to full-fledged business status. Doing things like advertising and marketing, keeping good books, and formally registering as a business, such as an LLC or S corp, help make it official. Running an actively promoted e-commerce store or a Patreon page? That’s a business!
On the other hand, if you have a personal creative practice and once in a while offer to sell your work to someone who’s interested or you’re just looking to defray costs, the IRS probably will deem that a “hobby activity.” That’s because you’re not building business or financial structure around the creative work, even if you occasionally make a few bucks.
While the concept of making a profit colors the IRS definition, don’t worry if you’re not rolling in it just yet. A business doesn’t have to be profitable right this very minute to qualify. If you’re making a clear and verifiable effort to run a creative business, that’s the indicator — not whether you paid rent from your creative work just yet.
For more info on creative businesses versus hobbies, read the IRS’s article "Here’s what taxpayers need to know about paying taxes on their hobby activities".
Got it! I definitely run a creative business. What kinds of expenses can I deduct from my taxes?
There are lots of standard expenses creative business owners may be able to write off, just like other self-employed folks or small business owners. This includes things like:
- The space you work in and the utilities that power it
- Cell phone bills, if you’re using your phone for your business
- Start-up expenses
- Equipment (and equipment depreciation in some cases)
- Eligible meal and travel expenses
- Your internet bill
- Certain insurance premiums and other tax payments
- Office supplies
- Marketing and promotional materials, such as flyers, business cards, promoted social posts, and advertisements
- Your business’s digital infrastructure and tooling, such as web hosting fees, software licenses, Patreon fees, and the like
- Necessary legal and professional services, like the cost for annual tax preparation
When writing off a home studio or home office, this space needs to be a dedicated area specifically for this work. Maintain good records of things like utilized square footage in your home or what percentage of your phone usage is dedicated to business needs, so a tax professional can help you get the numbers right on your return.
If you split any expenses between personal and work use — for example, maybe you just have one cell phone rather than a separate work phone, or you’ve set up a dedicated work room in your home — you’ll only be able to write off an appropriate portion of the overall expense.
Also, many of the tools, materials, subscriptions, continuing education, and some of the support you pay for to produce your business's creative work typically can be deducted.
What kinds of professional development materials can creators write off?
You can deduct all sorts of expenses for learning and development materials (think: classes, workshops, publications, and more) as long as the learning ties directly to your current work and creative business. A lot of fun and interesting things that help you stay in tune with your industry, learn from other creators, and keep up to date with trends or the competition will fit the bill.
For instance, if you’re an independent fashion designer, you might write off things like style magazines or tickets to a runway show. A playwright could write off theater tickets or a subscription to an industry quarterly. A game designer may write off an advanced Unity workshop or attend an educational lecture by a legendary game maker. You’re golden as long as the session is clearly related to your current creative career. But that “Ravioli Making 101” class you took for personal enrichment? No write-off there. (Well, unless maybe you’re making a game about stuffed pasta.)
Here's a hint: To set your business up for long term success, work with your tax professional to categorize your expenses, and, in the meantime, keep your receipts.
Can I write-off the supplies and materials I use to produce my creative work?
If your creative business requires equipment, supplies, products, or tools to make your creative work, whatever it is, those things may qualify as deductible business expenses. Here are a couple examples to get you thinking.
Example A: Performance and recording artists, musicians, actors, dancers, comedians, podcasters, and filmmakers can typically write off expenses like recording and film equipment, instruments, and relevant software costs. If your work has you in front of cameras or on stages, then stage makeup, costumes, and costume care (like alterations and cleaning) all count. Makeup and costumes should be screen- or stage-specific. Jeans and T-shirts probably won’t cut it, but if you’re in a role requiring full Victorian regalia, add it to the bill.
Example B: Visual artists, crafters, and fabricators who run creative businesses can usually deduct the cost of art, craft, and fabrication supplies (such as paint, pens, pencils, paper, canvas, clay, fabric, felt, metals, and so on), tools and equipment (such as easels, pottery wheels, sewing machines, welding equipment, soldering irons, saws, hammers, and so forth) and necessary repairs, protective and safety equipment (including steel-toe boots, goggles, masks, and thimbles), framing materials, and more.
Creators may also be able to write off costs for personal assistants and schedulers, union dues, agent fees, audition tapes, submission or reading fees, and the postage and shipping it takes to get physical creative work to customers.
Think of it this way: If you run a creative business, the cost of making creative things is a business expense.
How do I get started?
You’ve got this! For specific support, seek a local tax professional to help you sort out the right tax deductions for your tax return, and check out tools like Keeper, which can automatically help you find deductions among your past transactions. Then file those taxes!
This article is intended as knowledge-sharing, not tax, financial, or legal advice. Always consult with tax, financial, and legal professionals to determine what’s best for your business.