By Kerry Warren
April 4th, 2022
How is it already April and taxes are due? Last month, I was already feeling a sense of dread as the April 18th deadline approached, the pile of W2s and 1099s just kept getting bigger, and letters from the IRS remained unopened on my desk. I don’t even have a retirement account. I frantically Googled how to do finances on your own and came across an email from the Roundtable about a webinar on taxes for teaching artists. It felt like a sign.
There’s something comforting about commiserating in the daunting task of finances as a community. I have eleven W2s for 2021 and five 1099s, while my sibling with their salaried job has only one W2, earns more than me, and lives in a state without local and state taxes.
Additionally, I struggle as an artist who teaches with managing my earnings. Sometimes I’m paid weekly and other times monthly. Sometimes I do a gig and that money has to stretch over the course of three months. How do I manage that? For example, I’ll teach a stage combat workshop in the Bronx, get hired to do voiceover for a book, and then receive a stipend to sit on a panel for the Roundtable. Once I get the check for these gigs and then spend that money on rent, groceries, and Netflix, I move on to the next set of gigs. At the end of the year, I get a bill owing over 10k in taxes and freak out, asking how did this happen?
On March 1, 2022, Dominic Comperatore of Empire Taxes led an unrecorded Zoom, in which he broke down the mystery of the 1040 as if it was an old stand up routine of his. It was really helpful to see the writing on the whiteboard of why I end up owing money on a 1099. There are many gigs that I do where I am considered an independent contractor, meaning I am self employed . Whereas when I am employed on a W2, I get taxes taken out. Dominic had a great explanation of the difference between these two forms. If you do a gig and your employer says they’ll pay you $100 and you get a check that is $67 you were working on a W2. However if you received exactly $100 then you were an independent contractor and when it comes to tax time, the IRS will be asking for the taxes on that job.
He explained the various taxes are taken out of W2 paychecks – Federal taxes, State Taxes, then Local taxes for us NYC folx, Social Security tax and Medicare tax. Social Security and Medicare taxes equal approximately 7.5% of your gross wages and your employer matches that tax and sends it to the IRS totaling 15%. So if you’re self-employed and no taxes are taken out, not only do you owe Federal, State, and Local but also the 7.5% for social security and medicare and the extra 7.5% that your employer would have matched. He named that additional 7.5 % self-employment tax and it’s in your best interest to save 20-30% of your earnings in a separate account (so you won’t be tempted to spend it) for tax season if you do independent contract work.
He gave a similar webinar on taxes for the Actors Fund, an organization that offers free financial services and finance literacy, which is where I met Rebecca Selkowe, who teaches financial wellness. She helped me tackle my budget and get out of credit card debt in a webinar workshop she leads called “Managing Cash Flow”.
Managing Cash Flow was an opportunity for me to learn a freelancer’s budget and I got to see exactly where I am in regards to money. It gave me the courage to open the IRS letters, doctor bills, and credit card statements. That was the hardest part—preparing myself for the truth. And once I did, I had people to talk to about it. And it was much better to know than to spin circles and guess. I knew I didn’t have any retirement plan and I knew I had debt. However, once I took the class and faced everything, I was accountable to these tasks on a weekly basis and I had an expert to guide me, which made it easier to tackle.
One thing that I learned from taking all these classes is how helpful communal learning is and how having a money buddy makes the work a lot easier. Growing up, there were topics that my family did not discuss, one of which was money. What scared me the most about stepping into a career as an artist was the financial instability. I needed an outlet or someone trusted to talk to about my financial struggles with and create a course of action. It took me a long time to finally get a Roth IRA and what helped me get there were the emails with my money buddy about my fears and research. It really helped me feel less alone.
And this money buddy was not an expert on finance, they were just another artist like me that I met while taking these classes. The emails we exchanged were not bank account stats or stock predictions. They were more like check-ins: “Hey, have you looked at different brokers to see which one you’d like to have for your retirement account?” or “What’s your teaching pay rate for a 75 min class?” It was so helpful to have this friend to share ideas and resources with. When we emailed about how to figure out teaching artist pay rates, I discovered an invaluable tool through the Teaching Artists Guild, the TAG Pay Rate Calculator. This free tool continues to help me advocate for fair wages that make my teaching artist career sustainable. If you haven’t used the calculator yet, I urge you to try it out.
I have since taken lots of other free or low cost classes on finances so I can keep my goals realized and honestly less stressed. It’s been a new hobby really getting into investing and building my financial literacy. I hope that if you’re reading this you found it helpful or maybe at least felt seen. You are not alone if you feel lost or even angry when it comes to facing tax season as a teaching artist. I have included below a way to start if you feel paralyzed and three lists of resources to start your own journey to financial well being.
Checklist to begin:
- Set aside 2-4 hours a month to work on your financial freedom. It could be as simple as signing up for a free webinar on investing, reading a book on how to budget, or reading a finance blog on how to set up a SEP IRA. Make it a habit that 12 times a year you look at your cash and flow. Try not to wait till tax season to focus on your finances.
- Create a system or box to gather all your receipts, paystubs, bills, W2s etc. It should work with your lifestyle. You can use a spreadsheet or just an empty shoe box. They both have the same goal of getting your finances collected in one location.
- Find a money buddy, someone you can check in with once a month about your thoughts and goals on your journey to financial freedom. It helps me to know that I am not alone with my financial struggles.
Here is a list of tax resources to get started:
- Tax Tips for Freelance Teaching Artists with Dominic Comperatore
- Tax Tips for Teaching Artists
- Sag Aftra and AEA vita paperwork
- Food fridge vita resource
- Irs.gov how to state by state
- A Creator’s Guide to Tax Deductions – Sunlight Taxes
Here’s a list of books/blogs that I found helpful:
- Refinery 29 Money diaries
- The Official Black Wall Street
- The Skimm
- Thriving Artist – David Maurice Sharpe
- Nerd Wallet
Here’s a list of educators and organizations that I follow to further my financial literacy:
- Actors fund
- Rebecca Selkowe
- Creative Capital
- HB studios
- Pentacle, New York Foundation for the Arts
- Hannah Cole -Urban Glass
This article was co-published in partnership with the NYC Arts in Education Roundtable.