For our second ArtistProducerResource.com Learning Pathway, we’re ringing in the most *wonderful* time of the year! The time of year when you’re looking through pockets, drawers, and in between couch cushions for receipts. When you’re trying to figure out what that deposit in your bank account back in June was from. When you’re wondering if that dinner you went to with that touring company last January is deductible. Yes: it’s tax time. Maybe you started 2020 with the best of intentions, swore you’d stay on top of your finances all year long, but then life happened (and a certain pandemic happened, too). So now you’re sitting in front of a pile of papers faced with what feels like one very complicated tax return.
One Step At A Time
Step 1
Don’t fret. It may seem overwhelming at first, but if you take a systematic approach and break tax prep into smaller steps, it will feel more manageable.
Step 2
Familiarize yourself with the Canadian tax system and your obligations as a tax payer by reviewing the Income Tax page on ArtistProducerResource.com.
Step 3
Identify all the income you earned during the tax year (in this case, January 1, 2020-December 31, 2020). This may mean gathering together invoices you sent out, service contracts you signed, and records of deposits. You will also have to report any income that was reported to CRA in the form of T4s, T4As, T3s or T5s. By February 28, you should be able to see all applicable forms issued to you via CRA MyAccount.
Step 4
Organize all expenses related to your self-employment by type of expense—think office supplies, union dues, agent fees, home office materials, business meals, etc.
Step 5
Don’t forget about tax deductions that are available to all Canadians, regardless of self-employment status. (These include Medical, Donations, RRSP Contributions, Ontario rent credits.)
Step 6
If you’re feeling confident, you can prepare your tax returns using any CRA-approved tax filing software, or you can book an appointment with a tax professional. Make sure you’re up front when booking a tax appointment that you are a self-employed artist and that the tax preparer is familiar with your line of work. Not all tax preparers are created equal and it’s up to you to advocate for your needs.
Step 7
If you’ve decided to have your taxes done by a tax professional, be sure to review Artbooks’ “Prepare to Meet your Tax Preparer” guide before your appointment to make sure you have everything you need to make that session run smoothly.
Things to Consider
Grant Income
One aspect of personal income tax that is unique to artists is the receipt of grants. Grants are a welcome source of revenue for artists but can create quite a tax headache. Our Guide to Government Grants and Their Tax Treatments will help you with preparing your taxes after receiving a grant.
Employment Status
Unsure whether you should be (or might want to be) considered an employee rather than a contractor, or vice versa? Visit Employee vs. Contractor on ArtistProducerResource.com to learn the differences between the two (there are pros, cons, and tax implications for each).
Planning Ahead
Once you’ve climbed the tax prep mountain and emerged on the other side, it might be a good time to double down on a commitment to get/stay on top of your finances going forward. This will help you feel less overwhelmed next tax season, and will help avoid any nasty surprises—tax bills can be scary if you’re not prepared for them.
We recommend you take a hard look at your finances and plan a budget for yourself by checking out the tools and templates for Personal Finances and Planning on ArtistProducerResource.com. You might also be inspired to revamp your invoice template (which can be found on the Income Tax page) to make next tax season that much more bearable.
Keep Learning
Congratulations on wading into the murky waters of taxes as an independent artist. Your financial learning may have taken the backseat to your artistic learning in years past, but there’s no time like the present—we’re glad to see you here now! And remember, you’re not alone, and there’s lots of help around. There are plenty of further learning and development opportunities to help you with budgeting and personal finance. Some of our favourites are: Rags to Reasonable, Ambitious Adulting, and The New School of Finance.
About ArtistProducerResource.com
ArtistProducerResource.com is a free, searchable online encyclopedia of information, resources, tools, and templates for producing independent performance work in Canada, currently with a focus on Toronto. Launched in November 2017, it has since been visited by over 10,000 users, transforming the way artists producers access information and share knowledge across Canada. ArtistProduceResource.com is free to access and always will be. You can become a supporter by subscribing to our Patreon—we’ll send you a monthly newsletter with highlights, features, and all the newest content on the site. Got a suggestion for ArtistProducerResource.com? Send it to us here.
