1 Planning an arts exhibition in abroad and want to know if I have to pay tax, if I get to sell some of them.?

Question

What would be the tax rate and when do i have to report this?

Answer 1

If you are a US citizen, yes, you have to pay tax if you sell some of them abroad. The US taxes your worldwide income. Do you do this for a living? If so, you would be taxed at your regular tax rate (which I don't know), and also self-employment (SE) tax, which would be based on your net Schedule C profit. The rate is 15.3% of 92.35% of your net schedule C profit. As far as reporting it, you would report it on your 1040 when you file your 2007 tax return. If you are self-employed you should be paying quarterly estimates to cover your estimated tax liability (you need to pay either 100% of prior year tax liability (110% if high income), or 90% of current year liability (which you won't know until the year is over)). The estimates are due 4/15, 6/15, 9/15 and 1/15 of the following year. Then you have to do the same thing with your state income tax info (except there is no SE tax for a state income tax return).

If you don't do this for a living, then your tax would be capital gains tax and depending on how long you had the art would be either long-term gain (held over 1 year) or short term gain (under 1 year). Long term gain is taxed at a maximum of 15% and short term gain is taxed at your regular tax rate.

You might also have taxes owed over in the foreign countries based on the income you make, but you would get a foreign tax credit on your federal tax return for the foreign tax you paid (it might not be 100% though). And you might also need to pay VAT tax.

Answer 2

Of course! You'll have US income tax to contend with, just as if you had sold them in the US. You may also have foreign income taxes to pay depending upon the laws of the host country. Check with a local tax advisor in the foreign country where you will be selling your works. You will get a credit on your US return for any foreign income taxes paid.

You may also have VAT to contend with in the foreign country. Again, check with a local expert on that.