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Do you report the income from microstock agencies as income in your country?

43 (72.9%)
16 (27.1%)

Total Members Voted: 57

Author Topic: Do you report income for tax + how do you organize your financial workflow?  (Read 3213 times)

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« on: January 13, 2016, 16:37 »
I'm wondering what kind of financial workflow do you use to keep on top of everything stock-related? Do you have an accountant or do you do everything by yourself? Do you even report (poll above)?

I need to revise my workflow, as it's becoming harder and harder to keep track when an agency has sent me a payment. Up until now, I just had a huge excel sheet with monthly earnings per agency (with portfolio size, RPI, RPD, STR, etc.), but that's not really a good solution for reporting income, as you only need to report what the agency has paid out to you, if I understood correctly. So, for example, if you have xxxx credits on FT, but don't transfer it to your PP/Skrill/..., that "income" is not "taxable", as you haven't received anything. Right?

So, how do you manage your stock income, do you use any specialized software, or have a separate excel sheet with agency payouts only? Do you even bother with that (I personally know quite a few contributors who don't report it as income at all)?

« Reply #1 on: January 13, 2016, 16:41 »
I report every red penny I earn from anyone and give it to my accountant! USA here

« Reply #2 on: January 13, 2016, 16:44 »
I work on a cash accounting basis. I report all the income, and use the amounts paid to me in the calendar year shown in my Paypal account for the income numbers. This, along with everything else, goes to the accountant. 

« Reply #3 on: January 13, 2016, 17:02 »
I work on a cash accounting basis. I report all the income, and use the amounts paid to me in the calendar year shown in my Paypal account for the income numbers. This, along with everything else, goes to the accountant.

Yep, that's what I do.  I run my reports of out Quicken, and each Paypal deposit is withdrawn separately, so I can label them in Quicken as being from so-and-so.

« Reply #4 on: January 13, 2016, 17:39 »
On a side note, I opened the mail box this week and got a letter from the IRS stating I owed them $25,676.00 in taxes. After further research I noticed that they took one of my w9 for a job of $600.00 and made it $60,000.00!!! Now my accountant is handling the communication with the IRS but it will take months to resolve! Don't mess with the tax man!

« Reply #5 on: January 13, 2016, 17:46 »
I'm in the US and I report everything I earn as a sole proprietorship. I have a spreadsheet in which I track monthly income by agency so that I can report what doesn't generate a 1099. PayPal is close, but there are occasional checks (I licensed some photos to a book publisher and they don't do PayPal, for example).

As I don't hire models or staff and use my office (at my home) for both business and personal use, I forego any deductions for expenses. It might cost me a small amount, but in the big scheme of things (I file jointly with someone earning a lot more in a full time job than I do with part time stock) it avoids complex calculations for very little benefit.

I forward the income information to our tax accountant who puts everything in the right places on the right forms :)

« Reply #6 on: January 13, 2016, 19:04 »
My accountant adds all my stock income to my regular job situation and deducts my photography related expenses (milage, tolls, entrance tickets, photo and computer  equipment, etc) from it.
She even opened a new pension fund for my wife, investing in it exactly the amount I was supposed to pay in taxes. Her fee was money well spent and I'm planning to continue  to work with her.

Sent from my SM-N910T using Tapatalk

« Reply #7 on: January 13, 2016, 19:31 »
I use Quickbooks because my accountant can take the accounting file and drop it into his tax system. There is an online version for a reasonable price - but I started with the locally loaded version and have stayed. Income and expenses are all there. Mileage has been a big cost for me, followed by equipment. The occasional distant trip adds expenses up fast with hotel, food, and activities as quick adders.

If you are just starting the accounting thing then a spreadsheet is cheap. Reporting as hobby income is a place to start but you cannot take expenses below a net of income of zero (which you really don't want to do as a photography business either). For the next step up search for accounting packages on the Internet for use by freelancers. I've not tried any so don't have a recommendation but I've seen them for free and/or very cheap. Quickbooks also has (had?) a free version which has a lot of limitations but might work for a very small operation to start. Of course then they want you to move up but you would also have a experienced start on the regular use.

« Reply #8 on: January 14, 2016, 02:19 »
I am lucky my wife is a chartered accountant, she has drilled into me to record every penny I get and record all my expenses, and keep every receipt.

She organises on a simple excel spreadsheet one page for income one for expenses and does a summary under each one at the end of the tax year and reports to the tax man.

Any analysis I want to do I do on a separate spreadsheet

« Reply #9 on: January 14, 2016, 03:42 »
I can see that you use an excel to track all your incomes and I understand that you use it to report them in your tax return. Can you ask for to the agency some kind of document to prove those incomes? Some feedback?

« Reply #10 on: January 14, 2016, 07:18 »
So far, there are 7 votes for "no, I don't report microstock income for tax". I have questions for you guys as well!

How much do you earn per month, roughly? If it's like 100$, I can somewhat understand not reporting it, especially if you don't live in the US. But for 1000$ and above, isn't that playing with fire? Second question - do you have the intention to report it in the future? Aren't you afraid of the legal/tax institutions in your country? And which country is that where you microstock income can go unnoticed by the authorities?

I know it's hard to answer these if you're not somewhat anonymous on the forum, but I'd value your insights. You can register another account just for this purpose (too bad one can't set certain topics to allow for guest posting).

« Reply #11 on: January 14, 2016, 08:40 »
I keep a separate business bank account and PayPal account solely for MicroStock, and all payments go through those;  for major purchases, I keep receipts so I can offset against income.  I don't really bother for small expenses.

I am registered with HMRC (the UK equivalent of the IRS) as self employed (sole trader) and just do a self assessment form.  My gross earnings aren't large so I am not required to do detailed returns, and I am retired so my tax affairs are relatively simple.


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« Reply #12 on: January 14, 2016, 10:36 »
I have noticed each agency may "calculate" the 1099 differently so make sure you understand the final number.
For fotolia, they will report the amount you earned that year regardless if you "cashed" out those credits or not. Just do a view stats > credits earned for that year and the numbers should match on your MISC 1099.

They do not use the number that you were actually "paid" out via paypal ...

One year they made a mistake and had to send out revised ones. That is why I wait until the end of march to file ...

« Reply #13 on: January 14, 2016, 10:47 »
I keep a ledger book with all my income and expenses, also keep receipts and separate PayPal and business checking and credit card accounts. We use Turbo Tax Small Business and it is pretty easy - they have a program that walks you through filing a Schedule C (self-employed in the US). Some agencies and clients send me a 1099 but many don't so I keep track of every penny. I also sometimes sell prints which require me to file a state sales tax report once a year, which I can do online with New York State. Even before I started with stock I was self-employed so I needed to keep track of income and expenses carefully. The nice thing about Turbo Tax is it carries over depreciation expenses from year to year for you on large equipment purchases and does all the calculations. I believe you can import from Quicken to Turbo Tax as well.

« Reply #14 on: January 15, 2016, 21:07 »
I report every red penny I earn from anyone and give it to my accountant! USA here



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