In a recent article, I explain the difference between arts and crafts costs versus tax deductible expenses. One of the differences I discuss is the treatment of arts and crafts fixed assets. Fixed assets are any long-term assets you use in the normal course of business. So, when you purchase these items for your arts and crafts business, the price you pay or promise to pay, is a cost. Then as you use the fixed assets in the normal course of your business, you depreciate them.
Depreciation Life for Arts and Crafts Tools and Special Equipment
The good news is that most artists and crafter tools and special equipment will either be five or seven-year equipment. So, if you're somewhat familiar with depreciating your other assets that have a five and seven year life, depreciating your special tools will be a piece of cake.
Examples of Arts and Crafts Tools and Special Equipment
Wondering if your tools are five or seven-year property? Well, it's always best to check with your return preparer or accountant if in doubt. However, the following list should cover just about any piece of equipment or tools you may be using:
Manufacturing of Apparel and Other Finished Products: For example, this class includes any tools or equipment you use to make clothes and other textile products. Please note this does not include tools or equipment to make leather or rubber apparel - those tools are normally depreciated over seven years. Follow this link to learn how to depreciate five year assets.
Woodworking and Furniture Making: Any tools or equipment used to make wood products and furniture are depreciated over seven years. (and here's a link to learn how to depreciate seven-year assets)
Printing: For example, the equipment and tools used by screen printers or lithographers. This is seven-year property.
Manufacture of Jewelry and Other Finished Goods: A catch-all category, if you handcraft any types of jewelry or adornment or just about any other type of art or craft product, you'll depreciate your tools over seven years too.
