Unscientific Observations about Creators’ Finances. Part One (of Three)

Creators During Covid: Lost work, creative fundraising, bright spots and burnout.

A Money Bootcamp member reached out to me to ask me to share my observations about creators, since I sit at a vantage point to see what happened to so many people’s financial situations. As I wrote, I realized that these observations are so numerous that it would help to split them into three categories: General observations from our Covid Hell-Year, Observations about the effect of the Covid stimulus bills, and a more evergreen set of observations about creative people’s financial situations more generally. So with that, here is the first in a three-part series about my unscientific conclusions about creators’ finances. Part One: Creators During Covid: Lost work, creative fundraising, bright spots, and burnout. 

People lost work. During a single work week in April 2020, 15 out of 16 of my tax clients had just become unemployed. This may be an unscientific sample, but nonetheless, it was staggering. I spent that weekend in a tailspin worrying about the implications.

Performers suffered. Of all my creative clients, performers suffered the most as a group during Covid. This is logical. Covid stopped all group gatherings, so anyone used to performing in front of groups was clearly stopped cold. But it wasn’t just that they could no longer perform in front of audiences. The double blow for them was that many performers have “day jobs” in the restaurant and service industries. So while many actors and musicians saw their scheduled performances cancelled, they simultaneously lost their jobs in restaurants and bars. 

A bright spot: murals. Of all my clients whose creative work not only survived but thrived during Covid, the brightest star was the muralists. This makes sense, and you probably observed it, too. Murals are one of the most straightforward and inexpensive forms of public art to propose, approve, and fund. And as people drained out of public spaces, many public and private organizations paid to have murals painted to activate and enliven those empty spaces. I bet anyone reading this now can name three local murals that went up in your area during Covid.

Another bright spot, albeit with far more varied results, was people who were able to take their work online. People who taught online classes did well. There were bored people at home and people looking for entertainment for themselves and their children, and many people took up new hobbies like baking, figure drawing or even skill-building for their job searches and transitions. Still others had visibility from the increased attention to social media. One potter had her best year ever because she figured out a way to teach socially-distant pottery classes to children in her driveway, and advertised effectively on social media. A visual artist and illustrator with colorful, timely, activist/progressive messages went viral on social media and sold a record number of stickers.

Creative fundraising. One thing that impressed me during Covid, the 2020 election, and the activism around trans rights and Black Lives Matter/police protests was the creativity and energy that creative people poured into fundraising for causes they care about. Artists designed and printed T-shirts to promote and fund their preferred political candidates. They donated portions of their artwork sales to activist causes such as racial justice, climate justice, and trans rights. When they received stimulus payments, many creative people gave that money directly to others in the form of mutual aid. 

As a tax expert, I want to point out that very little of this activity benefitted the donating artists themselves in any financial way (although let’s not discount the karma, happiness, and sense of agency it gives one to give money to causes you believe in). Tax law rewards large donations to charitable organizations, but only for taxpayers who itemize. This represents only 10% of the taxpaying public, and skews toward the wealthy. Congress did allow a temporary $300 deduction for charitable contributions during 2020 and 2021 for taxpayers who do not itemize but take the standard deduction (ie, the other 90% of taxpayers). But even so, much of the fundraising activity I witnessed in my practice was not directed at organizations that count for this purpose. Only money donated to non-profit organizations are tax-deductible. Mutual aid and political contributions don’t count.

My last unofficial and unscientific conclusion on the 2019 and 2020 tax seasons is that Covid exhausted people. Worry, isolation, and trauma--both historic and immediate--pervaded. Parents were stretched to the breaking point. Our tax conversations were interrupted by young children. Mourners suffered alone. Historic traumas rose to the surface and stayed there. Financial stress was everywhere. 

As we emerge from the darkest days of Covid, I want to acknowledge how exhausting this all has been for everyone. Burnout is pervasive. I personally dealt with my Covid year by throwing myself into work and ignoring everything else - my family, my health, my artistic practice, ugly politics, and any sense of balance or fun. So if you, like me, need a break from work (or whatever you threw yourself into), I hope you take whatever space you can. I know I am feeling a deep need to reconnect with my family, my artistic practice, and basic rest and self-care. It reminds me of one of the things I teach about the reason to develop healthy financial habits and a savings cushion. The purpose is so that you can rest. And if Covid has been an emotionally, financially, spiritually and physically draining sprint for you, as it has for me, then let’s do something revolutionary right now. Let’s take pride in being humans, not machines. Let’s rest, reconnect and recover.

What you need to know about the Child Tax Credit

Starting July 15, 2021, the US Government is giving families monthly payments of $300 for children under age 6, and $250 for children ages 6-17. These payments will continue through December 2021, and then stop, unless Congress reinstates them.

So what are they? 

These payments are the result of an updated Child Tax Credit, expanded and revised by the Biden administration, and enacted in the March 2021 Biden stimulus bill. Before 2021, the Child Tax Credit was a refundable tax credit that--like most tax credits--was rolled into all your other credits at tax time, and delivered as a lump-sum reduction of your taxes, once per year at tax time. What the Biden administration did is threefold:

• they expanded the amount of the credit--from $2000 per child under 17 to $3,600 per child under age 6 and $3,000 per child between ages 6-17, and

• divided the credit up into monthly amounts, to be sent directly to families each month via direct deposit (or by check if you don’t have a bank account).

• They also expanded eligibility for the credit, allowing all but the richest families to receive it (9 out of 10 families will get payments)

What you need to know

Money will be sent directly to your bank account by direct deposit starting Jul 15, 2021. The US Treasury will send money to the account listed on your tax return. If that is what you want, then no action is required. Families eligible for the credit are those with annual income less than $150,000 for married filing jointly, or under $112,500 for Head of Household (unmarried individuals with children). (Single filers with annual income under $75,000 are also eligible--although I’m still scratching my head about how these folks will actually be eligible, given that single filers without dependent children will not have children for whom to claim the credit). Families with higher incomes will be eligible for a reduced amount of the credit.

If you do not have bank account information listed on your last tax return, you will receive a paper check, mailed to the address listed on your tax return. If you’d like to receive direct deposit, you may enter your bank information at this IRS website. You can also use that site to check your eligibility for the credit.

What do you do if you don’t file a tax return and are eligible for the new Child Tax Credit monthly direct payments? You can sign up to receive the money at the IRS’s new non-filer sign up tool. This is important because many of the lowest-income people in the US do not file tax returns, and have therefore been ineligible for this and other tax credits in the past. 

The expanded child tax credit is expected to have a huge impact on children in the US. It is predicted to lift 50% of children in the US out of poverty. Economic research shows that a monthly payment labelled “Child CTC” is more likely to be spent on the children it is meant to benefit than a lump-sum annual tax refund. And it will benefit 9 out of 10 families in the US. If you want the expanded child tax credit to continue past it’s expiration date of December 2021, be sure to let your members of Congress know.

Watch Hannah’s recent talks about the new child tax credit. If you have further questions about the credit, you can check out the IRS’ FAQ page for more information.

DISCLAIMER: True tax advice is a two-way conversation, and your accountant needs to hear your full situation to apply the rules correctly in your case. This post is meant for general information only. Please don’t act on this alone.

Hannah Cole is an artist and Enrolled Agent. She is the founder of Sunlight Tax.

You Need a Budget Podcast: Simplifying Taxes for Artists and Creative Professionals

So shut down any misconceptions the world tells you about artists and money.

I talked with Jesse Mecham at the You Need a Budget Podcast about the capabilities that creatives bring to the table, breaking the artist stereotype, and starting bookkeeping systems that work for you.

Money Story: Grant Conversano: Invisible backstories, peer influence, and betting on yourself.

Grant Conversano (they/them) is a filmmaker. They graduated the UNC School of the Arts in film, and started Apple House Pictures with their brother, Adam Conversano. They currently live in New York City.

Hannah Cole: Who are you, what are your pronouns, and what do you do?

Grant Conversano: I’m Grant Conversano, I use they/he pronouns. My brother and I are filmmakers, from Concord NC, and I went to UNC School of the Arts in filmmaking. I’m living in Brooklyn with my brother, and we run a small production company. We produce commercials, documentaries, music videos and write our own creative projects and features. We recently wrapped commercial content for Andrew Yang’s mayoral campaign.

HC: What brought you to a place where you wanted to learn how to get your money stuff together?

GC: Before the pandemic, I had only anecdotal knowledge how to be a freelancer after art school. I only knew the basics from friends just out of school. Really, if I’m doing what they are doing, that’s fine, living paycheck to paycheck, scrambling, getting 1099s together at the end of the year.

I remember thinking “Oh I got a big tax refund,” like that’s a positive. But I remember that you said this, “if you don’t trust yourself with money all year long, then getting a refund is a way to save. But that is something to look at.”

During the pandemic, I was unemployed, and I needed to get income. Freelancers were newly eligible for unemployment. Stimulus checks were coming, and I knew I needed to get in the system as fast a s possible to keep things going. It was unclear how to do this. The tax code was changing, there was new money from the government, all on top of just entering my mid-20s. I went to Google, we found your website and we went from there.

My desire to get into your program was realizing how much the world was changing,I’m in my mid 20s, and I’m starting to look at the scope of life.

HC: Can you tell us about where you are coming from in your money story?

GC: We had a turbulent upbringing. Our father was a lifelong alcoholic, and had trouble holding down a job despite having a master’s degree. He has a lot of social mobility on one hand, but mixed with addiction, that really rocked our family for many years. The last job I remember him having, I was nearing the end of high school. He didn’t have a job the entire time I was in college. My mom was the single income of our family while there were a lot of student loans being taken out in my name. My brother followed behind. I didn’t have a sense of the implications of taking out loans to go to art school. I was young--17. In 2013, no one discussed what that meant. No one discussed that we might be signing up for a lifetime of debt.

My parents wanted the best for us. But getting out of school, the reality of student loans, the pressure of moving to a city like New York or LA, the class barriers became apparent very clearly. In school they were masked to a degree. I thought I was doing all the right things--taking internships at very prestigious places, being an assistant to people I have learned a lot from in the industry. It was absolutely unsustainable--I was incurring credit card debt on top of that. It caught up with me quickly because I wasn’t making enough to live on--close to nothing for people in the industry, even though it seems like that was what I was expected to do. All the signals said, “keep going down this road,” but at a certain point, the numbers weren’t working.

I read a book by the Duplass brothers. It was honest and practical in terms of life story, money, housing, what you really need to be thinking about. They are talking about film, but really life in any creative pursuit. How long it took--they couldn’t always be in the most expensive place--that isn’t what made their careers. Sometimes they were on the outskirts.

I moved back to North Carolina, my brother and I moved in together, a year before the pandemic. We talked about building something together - we were getting signals that we were making a mistake, doing the wrong thing to stay in North Carolina. But then the pandemic came along, and it felt like it really was the right decision. We would rather bet on ourselves than bet on the approval of some institution. 

People really realized during the pandemic that they had to retreat and fend for themselves. It became clear who had bigger safety nets than others. We were still very fortunate to a relative degree. But the illusion that we are all in this together cracked.

We started building from there. Working from home, editing for other people, building up a portfolio, getting clients for ourselves. My brother dropped out of college and we started working. We started our own production company.

A lot of people in their 20s get a bunch of roommates and make that work. I didn’t want to do that anymore. There aren’t many boundaries between our work and life - we live together and work all the time.  

HC: What have you learned from this experience?

GC: Reading about business in general, treating this work as work, and knowing it is a business, and that we need contracts. Knowing we need a system, and truthfully letting go of naive ideas we indulged in art school of the purity of film. It’s an expensive art form at its best, and most of the time you’re working with a lot of people. You need to have boundaries set in place to navigate that. Taking the business side of every job seriously. That was a choice at a certain point.

HC: Have you had any revelations?

GC: For the majority of us, our sense of self and of money is so wrapped up. It took a lot of work--therapy, and taking your course. They echoed each other. You have to take responsibility for your own life, actions, choices. At what age do I stop blaming my parents and take responsibility for myself? Not using the idea of being an artist as a defense in the tax code. As though knowing about taxes would make me less of an artist.

I think a part of it is our culture. The mega-successful artists - the image that is put out there is that they don’t talk about the other things. It penetrates some illusion that people arrived at all this success on their own, and without business savvy or skills. But if you peek behind any story of how someone made it somewhere, there was a lot of help involved. Do people publicly acknowledge that? Or do they let people believe they magically arrived there?

I think even for instance, I did get into investing before all this. I naively downloaded Robinhood. I wasn’t putting serious money into it, but was interested in understanding investments. The Gamestop moment was really interesting. Part of me was like, whoa, what if I put more money in? I know that is about as close to gambling as you're  going to get. Building for sustainability is an important transition I’m making. Your course on long term investment strategies was helpful in thinking in decades, not just in moments. 

It’s weird because, ultimately, you just gotta put your faith somewhere. There’s a lot--it’s not clear what’s going to happen next. 

Everyone’s story is different even if you think your peers and you are in the same world, the same school, the same party. Everyone is different. Everyone is coming from a different place. Most of my life, most people didn’t know about the alcohol or dysfunction in our life. That just looked like “I’m not eating lunch today.” Trying to fake it because of the insecurity. Owning that. Owning, “well, this is the insecurity, and we’re just starting here.” I’m actually taking steps from where I come from, and that can be true for anybody. Owning where you’re at without shame. This is where I’m starting from.

I had to get over whatever shame I had about money to even call you. That was a big step--asking for help. And that is usually when things start to look better. It’s like, “Hey, I have Google, I’m not alone, I can see what happens.”

Having the gumption to push past certain fear. Some people can walk back to their parents’ house, and we couldn't. So we were just like, “I guess I’m just gonna plow ahead.”

ReverseCyclopedia Podcast - They Have A Word For That: Felony

So don't buy that old economics bulls**t that money is neutral.

I did a super fun COMEDY podcast about taxes (weird, right? But it's true) for the new pod ReverseCyclopedia.

We talk about money weirdness, tax misconceptions, and how I'm 95% Sunlight and 5% Dominatrix.

Take a listen below.