1/7 Tax Related News (Patreon)

Okay, this bit of news was known for about a month or so, but I haven't really thought much about it until recently when other artists have mentioned their greviences towards it. I'm talking about the IRS enforcement of the 1099-K form reporting from $20k to $600. (For those living outside of the United States: This is an event within the US government that's adding tax shinanigans)

Now this is a rather serious bit of news as my last number of years was doing artwork to pay rent and various other activities. I certainly could not afford to pay the taxes at the time in the beginning when I started going to work as a freelance artist. But I'm getting ahead of myself.

This new act recently passed by the government means that, for anyone using online services such as paypal, Stripe, and so forth gets paid more than 600 dollars a year, they recieve a 1099-k. Which means that the service has let the IRS know you have this money as income, then you must pay the tax for this amount.

For a self-employed person, this amounts to roughly (at max) a 15% tax. (ie. 600 dollars would come out to 90 dollars in tax.) So, if I were to earn 600 dollars a month, for twelve months, I have to make sure I have $1080 dollars saved up by the end of the year. That's a pretty heavy blow to the wallet.

Keep in mind, it might not be 15%. I don't make enough to pay taxes so I don't know the specifics., let me know if I'm wrong.

So what would be some solutions for such a situation as an artist? There are several, a lot with good and bad outcomes. Here are the three major solutions I had come up with based on this data.

1) Get a job. (I personally don't like this but it's still an option given I got open job positions near the area)

2) Find a service or method that will not trigger the 1099-k form. (This is especially tricky and annoying as such options are very limiting to both the artist and customer. Many online stores and services require themselve to report to the IRS.)

3) Use the paypal's invoice more seriously and add the 15% tax upon the prices for commissions. (I also don't like this as it hurts my commissioners financially, but it would immediately solve the issue as little to no transitional changes would be required for both parties involved.)

These are the most likely possibilities for me to choose to keep myself afloat finacially. If I were to try and avoid the issue and pretend it doesn't exist, it'd likely bite me in the butt later on. If nothing is done about this new tax policy, then it's likely big changes for everyone involved in a gig like artists, sellers, and crafters.

It's very likely I'd have to go with option 3, as it would be the cleanest method of transition. Just have to account for the extra cost, which would likely just be an extra 5 dollars or less for my more pricey commissions, all things considered.

But there is still time to think it over and see if there are better options available. Patreon and Subscribe Star will be largely the same, requiring no additional work from my fans.

So that's about it. I'd like to know what everyone's thoughts are on the matter. It wouldn't be the first time my finances took a hit due to outside forces, but learning the opinions of others help put things in a clearer perspective. So what do you think of this new Act that had been initiated?