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Author Topic: Microstock - is it consider a hobby or business in the eyes of the IRS?  (Read 5771 times)

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« Reply #25 on: April 06, 2015, 13:39 »
+1
Hi Tom, it really sounds like you need a new accountant.


ultimagina

« Reply #26 on: April 06, 2015, 16:53 »
0
Even if it is hobby, you add the microstock income to your main income and deduct expenses like lenses and other hardware, parking, millage deductions for photography purposes, accommodation proportional to the time invested in photography.
If you have profit, see if you can still invest in a pension fund, instead of paying more taxes.
« Last Edit: April 06, 2015, 16:56 by ultimagaina »

« Reply #27 on: April 06, 2015, 17:04 »
0
In Canada there was a big test case involving a rich guy and his horse farm, which set the precedent. You need to have the reasonable expectation of making a profit and are allowed to operate at a loss until you can achieve a profitable operation, in a reasonable amount of time(which I believe is generally accepted as three years). Ditto on your needing a new accountant. At most, they should warn you that you are in a high audit group.

« Reply #28 on: April 06, 2015, 18:46 »
+2
My PROPS category is massive... much like my Amazon bill. ;) which is pretty much the same thing.


« Reply #29 on: April 06, 2015, 19:03 »
+2
Your accountant doesn't know jack. I'd get another one. Especially if you have an LLC that you're taking money into. I PM'd you some of what I do.

« Reply #30 on: April 06, 2015, 19:05 »
+1
In Canada there was a big test case involving a rich guy and his horse farm, which set the precedent. You need to have the reasonable expectation of making a profit and are allowed to operate at a loss until you can achieve a profitable operation, in a reasonable amount of time(which I believe is generally accepted as three years). Ditto on your needing a new accountant. At most, they should warn you that you are in a high audit group.

I don't think you're in a high audit group unless you're making $250,000-plus. The main people they go after are doctors, lawyers, accountants, construction contractors. They really like pummel contractors, especially ones who try to pay piece pay instead of a salary or hourly wage. Like $20 for every door your install instead of $20 an hour. 

The IRS is short-handed, thank God. Going after the little fish is too little reward.

And now I'll probably get audited this year even though I'm a tiny fish.
« Last Edit: April 06, 2015, 19:08 by robhainer »

« Reply #31 on: April 06, 2015, 19:11 »
0
Even if it is hobby, you add the microstock income to your main income and deduct expenses like lenses and other hardware, parking, millage deductions for photography purposes, accommodation proportional to the time invested in photography.
If you have profit, see if you can still invest in a pension fund, instead of paying more taxes.


Good suggestion.  There's all kinds of things you can do.

http://www.irs.gov/Retirement-Plans/Retirement-Plans-for-Self-Employed-People

« Reply #32 on: April 06, 2015, 19:29 »
0
In Canada there was a big test case involving a rich guy and his horse farm, which set the precedent. You need to have the reasonable expectation of making a profit and are allowed to operate at a loss until you can achieve a profitable operation, in a reasonable amount of time(which I believe is generally accepted as three years). Ditto on your needing a new accountant. At most, they should warn you that you are in a high audit group.


I don't think you're in a high audit group unless you're making $250,000-plus. The main people they go after are doctors, lawyers, accountants, construction contractors. They really like pummel contractors, especially ones who try to pay piece pay instead of a salary or hourly wage. Like $20 for every door your install instead of $20 an hour. 

The IRS is short-handed, thank God. Going after the little fish is too little reward.

And now I'll probably get audited this year even though I'm a tiny fish.

Actually, photographers are high on the audit list. Every accountant I have had has confirmed this. And yes, I have been audited.

Shelma1

« Reply #33 on: April 06, 2015, 20:11 »
+6
I called the IRS once to see if they had one of my tax returns on file, because I misplaced it and wanted my new accountant to look it over to see if I'd screwed anything up (I did my taxes myself for a couple of years). A few weeks later I got a letter (not my tax return) from the IRS. I opened it, feeling very queasy...and inside was a check for about $3,000. My call had obviously gotten them suspicious and triggered a review, and when they took a closer look they discovered I'd overpaid. It was either self-employment tax or Social Security, can't remember which. Ha! What a happy day that was. Still makes me smile.

No Free Lunch

« Reply #34 on: April 06, 2015, 20:28 »
0
I called the IRS once to see if they had one of my tax returns on file, because I misplaced it and wanted my new accountant to look it over to see if I'd screwed anything up (I did my taxes myself for a couple of years). A few weeks later I got a letter (not my tax return) from the IRS. I opened it, feeling very queasy...and inside was a check for about $3,000. My call had obviously gotten them suspicious and triggered a review, and when they took a closer look they discovered I'd overpaid. It was either self-employment tax or Social Security, can't remember which. Ha! What a happy day that was. Still makes me smile.

Nice! If my business is not my main stream of revenue am I suppose to be paying social security? I already max out my social security tax with my main job.

Shelma1

« Reply #35 on: April 06, 2015, 20:40 »
+2
I think that was the problem...I'd paid Social Security tax on my entire income, not realizing there was a limit (wage base). So I don't think you need to pay more if you're already maxed out with your main job.

ultimagina

« Reply #36 on: April 06, 2015, 20:46 »
+1
I called the IRS once to see if they had one of my tax returns on file, because I misplaced it and wanted my new accountant to look it over to see if I'd screwed anything up (I did my taxes myself for a couple of years). A few weeks later I got a letter (not my tax return) from the IRS. I opened it, feeling very queasy...and inside was a check for about $3,000. My call had obviously gotten them suspicious and triggered a review, and when they took a closer look they discovered I'd overpaid. It was either self-employment tax or Social Security, can't remember which. Ha! What a happy day that was. Still makes me smile.

Nice! If my business is not my main stream of revenue am I suppose to be paying social security? I already max out my social security tax with my main job.

I'm also maxed-out from my main job. However, I was able to deposit in my wife's IRA what I was supposed to pay extra in taxes.

« Reply #37 on: April 09, 2015, 14:44 »
0
it is considered as "very" busines for me - -30% for all downloads made from us customers. (and it's unconstitutional - according to the us laws for example... -but, as a foreigner, it's more "take it or leave it" for me (and the others)). but - it's business. it's not hobby if you are making money out of it.


 

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