Retiring to the Arts or Writing | Residencies & Grants and Such

[smoghat]

Have any of you retired to art? Not just selling some things on etsy, but rather as a serious practice that involves getting grants and residencies. There are a lot of those out there, but also a ton of competition.

One hitch is that the way I've set up my practice is as an LLC. This was done for tax reason when I was employed. Since I have made many deductions over the years against the LLC when I was employed, I could use depreciation to deduct any income plus expenses that I might incur during the year until about $30,000. I find that in Europe, they are eager to pay me as an LLC, but in the US it can be harder.

Before I get e-mails asking how to get the grants and residencies, I'm only barely in the game and I've had my work exhibited at the Museum of Modern Art and other top venues (I don't have an art degree, but work in a related field).

[Bolshevik Artizan]

Hi Smoghat

I write - please see www.der-jimmelwriter.com - and as you can see I won a BC Arts Council Award this year and am applying for a Creative Residency at Banff Arts Centre here in Canada for January 2019. I also work as a commercial writer and editor, and like you I set up a company, though as a sole trader.

The tax advantages here in Canada are similar, and I can deduct a wide range of expenses. I think the reason for few responses to your post are a) not many people are as mad as we are to go full on with this and b) I wasn't too sure what the question was...

If your question is about the tax efficiency of various company formats, then in Canada grants are taxed as income and after consultation with a tax guy I decided to stay as a sole trader. In the UK, grants are treated like prizes, i.e. no tax; I don't know about the USA.

Sorry I can't be of more help and very best of luck to you -


Bolshevik Artizan

[Orvell]

Posting to follow. I'm quite a ways off from anything like this, but very interested in reading how people have managed.

[expatartist]

Smoghat, it sounds like you've been peripherally involved with art in some respects for some time. I'd be interested to know more about your artwork, your professional field and how it relates to art - feel free to PM! It's been said there are no art worlds, there are art villages. In what village does the work you make fit? What form does it take? What's your intended audience? I take it you're not interested in painting for calendars (nothing wrong with that) but perhaps something more intellectually engaging.

I won't be retiring to art, but am using MMM as incentive for frugal habits that will keep my art practice sustainable over the long term. I have a BFA in painting but it took me many years to warm up to contemporary art. Historic processes and imagery had much more interest and still hold some for me. In the meantime, much of what I did art-wise was not relevant to society today. Now? More so, but I'm still on the emerging end of the scale at 43. This is also because I left the US 15 years ago for Asia and have moved around too much to be part of an art community. I'm immigrating to Hong Kong (where I've lived or visited for a decade), and am finally settling in for the long haul. Previously I had a sole proprietorship here but will probably set up an LLC this time around, since some of my projects will involve import-export and possibly liability in terms of materials used. Would be interested to know more about how it's been challenging for you to accept art payments via an LLC.

An artist-in-residence gig on renewable 2-year contracts got me here this time round (via Beijing), providing the income and stability and time for other projects. I've done a number of residencies in places including Malaysia, Tibetan Sichuan, and soon Barcelona. Ran an informal one at my flat in Sicily for a couple years. It's useful to look at what your goals are for a residency to help you select the right one(s) for you. For years I looked at opportunities via mailing lists like Residency Unlimited, Resartis, Art Opportunities.org. Not sure if this answers your questions at all but in order to give useful advice would be good to start by seeing your work!

[smoghat]

I've PM'd.

What you say about art villages is true. I'm not sure an art village for my work exists. But then the other day I realized… that's an opportunity to build an art village. It may be a hamlet or a collection of huts at present.
 
     

[Salim]

I started in fine art, had a long career in commercial art, and, a few years ago, retired to fine art. Currently, I am experimenting and working toward building a body of fine art to offer for sale.

Years ago, I looked into incorporating my commercial art business, but it didn't seem particularly advantageous for my situation.

Please let us know what you decide to do so we can learn from your experience.

Congratulations on getting into the MMA! That's a great coup!

[FIRE Artist]

I intend to do this, but am a few years out, still trying to find my legs if you will. 

In Canada there was a very recent case where after decades of exhibiting, Revenue Canada declared  an installation artist/instructor to be a hobbyists and refused materials deductions against grant income for installation work as it was not produced “for sale”.  Needless to say, the community is a little shaken.

[smoghat]

That’s scary. I could see the Trumpen IRS do the same. Anything this administration can do to screw me, they seem to. And I think it’s no accident. Artists who produce work that isn’t sold must fall under the definition of wrongdoers to these folks since they just don’t get it.

Well, there is a long term plan to produce work to sell. So I may yet do that.

[Bolshevik Artizan]

I intend to do this, but am a few years out, still trying to find my legs if you will. 

In Canada there was a very recent case where after decades of exhibiting, Revenue Canada declared  an installation artist/instructor to be a hobbyists and refused materials deductions against grant income for installation work as it was not produced “for sale”.  Needless to say, the community is a little shaken.

Believe it or not, Canada looks like Trumpistan compared to the UK. In the UK, artists' grants are considered untaxable, ditto prizes, etc. And benefits in kind, e.g. residencies, are not even considered as income. I am considering applying for a residency next year but was stunned to learn that the potential benefit in kind (room and board) would be included in my 2019 tax calculation and taxed alongside the rest of my income - although I never receive a penny from the foundation.

This means that writers will pay through the tax system (admittedly only 20% of what it "costs" the foundation) but still - it would put me off if I were a young writer on next to nothing in terms of income.

BA

[expatartist]

BA that's mad. So the residency passes on its tax liability to artists?

I did a semester long printmaking residency in Malaysia and the university neglected to tell me I'd be liable for income tax (though I was on a tourist visa) which ate up most of my last month's salary.

[Bolshevik Artizan]

BA that's mad. So the residency passes on its tax liability to artists?

I did a semester long printmaking residency in Malaysia and the university neglected to tell me I'd be liable for income tax (though I was on a tourist visa) which ate up most of my last month's salary.

Correct - I don't think they want to - they have to. Meanwhile, when I was a senior executive earning >$250k, I used to get a rebate worth 10x that sum of money for contributing to my pension fund. Who said tax systems are slated towards the rich? Ha!

BA

[Missy B]

Hi Smoghat

I write - please see www.der-jimmelwriter.com - and as you can see I won a BC Arts Council Award this year and am applying for a Creative Residency at Banff Arts Centre here in Canada for January 2019. I also work as a commercial writer and editor, and like you I set up a company, though as a sole trader.

The tax advantages here in Canada are similar, and I can deduct a wide range of expenses. I think the reason for few responses to your post are a) not many people are as mad as we are to go full on with this and b) I wasn't too sure what the question was...

If your question is about the tax efficiency of various company formats, then in Canada grants are taxed as income and after consultation with a tax guy I decided to stay as a sole trader. In the UK, grants are treated like prizes, i.e. no tax; I don't know about the USA.

Sorry I can't be of more help and very best of luck to you -


Bolshevik Artizan

I'm pretty sure you mean 'sole proprietor' not 'sole trader'.
For those not clear on the distinction, a sole proprietor files as a business, but is not incorporated. For most artists in Canada this is by far the best way to go - filings are much simpler.

[expatartist]

I'm not sure an art village for my work exists. But then the other day I realized… that's an opportunity to build an art village. It may be a hamlet or a collection of huts at present.     

Your work by its nature would be conducive to creating one. Would be interested to hear how your plans evolve. Bringing people together over art / with art / creativity adds meaning and connection to life. I am trying to do this in HK with an event later this year, even if it doesn't get huge turnout will hopefully connect artists and ideally bring minds together via creating alternative visions of potential solutions to our city's problems.

[Missy B]

I intend to do this, but am a few years out, still trying to find my legs if you will. 

In Canada there was a very recent case where after decades of exhibiting, Revenue Canada declared  an installation artist/instructor to be a hobbyists and refused materials deductions against grant income for installation work as it was not produced “for sale”.  Needless to say, the community is a little shaken.

Article here:
https://www.cbc.ca/news/canada/nova-scotia/arts-taxes-canada-revenue-agency-canadian-council-nscad-1.4654742

And boy, shaken is right. People must be nervous as hell. It's a pejorative kind of a call Revenue Canada is making, as if art doesn't qualify as a real job. The grant income qualifies as real income, so whatever you had to spend to fufill the conditions of the grant should be deductible. It's reasonable, whether you want to call that spend business expenses or something else. Certainly the guide on the subject does not specify that income must be commercial for expenses to be valid. Probably it was just an interpretation at a later date.
Rev Can has been getting nastier according to Tim Cesnick, who wrote an article at Globe and Mail about the feedback he's getting from other accountants and a court case that found against Rev Canada.
I hadn't planned to apply for grants for my writing, and am glad my plan is a commercial one.
I didn't read anything about whether Canada Council is backing a court case -- maybe it isn't yet to that point -- but all Canadian artists should be backing up whoever takes a case like this to court with hard cash.

[Bolshevik Artizan]

Thank you for adding the CBC story Missy B and for making the distinction between proprietor and trader - yes, I meant sole proprietor.

All the best -


BA

[SwordGuy]

Hi!

I just retired from a software career and am intending to focus on artwork, both for my own pleasure and for sale.   Thankfully I'm FI so I don't have to worry about making a living at it, particularly as I hone my skills.

I've looked at some residencies and while they look like fun, I'm not yet ready to apply.   I think I'm a year or two out before I build up a body of work that would give me even a hope at getting a residency.  I just need the practice and the day-to-day experience rather than an occasional hour or three squeezed into a busy schedule.  Plus, I still need detox time from my old job and my wife and I need to acclimate to being around each other all day.

I'm glad you asked your questions.   I'll need to find out the answers for myself, probably based on US rules.  I'm not really interested at this point in my life for a year or two long residency.  I think 3 months is as long as I would want to go.
 

[FIRE Artist]

I didn't read anything about whether Canada Council is backing a court case -- maybe it isn't yet to that point -- but all Canadian artists should be backing up whoever takes a case like this to court with hard cash.

CARFAC is involved.
http://www.carfac.ca/news/2018/05/04/statement-from-carfac-about-artists-facing-cra-audits/