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Microstock Photography Forum - General => General Stock Discussion => Topic started by: Gel-O Shooter on March 31, 2017, 16:17

Title: Question For Those Who Have Closed Up Shop And Quit....
Post by: Gel-O Shooter on March 31, 2017, 16:17
How do you report earnings on your income tax return?  Hobby income, even if it's still fairly substantial?  If you put zero effort into it and just passively collect royalties all year, would it still qualify as a "business"?  Just curious as this will be my situation next year.  Thanks!
Title: Re: Question For Those Who Have Closed Up Shop And Quit....
Post by: increasingdifficulty on March 31, 2017, 16:43
It's how much you make that's relevant, not the effort.

Inactive musicians with millions in royalties can't just claim it as a hobby unfortunately...
Title: Re: Question For Those Who Have Closed Up Shop And Quit....
Post by: angelawaye on March 31, 2017, 17:20
I'm a sole proprietor DBA. I file a schedule C to report the income.
Title: Re: Question For Those Who Have Closed Up Shop And Quit....
Post by: StanRohrer on March 31, 2017, 18:08
I'm not a USA tax accountant. I think you still operate as a business with income. At some point when the income goes flat then you also have to consider any capital equipment (cameras, etc.) within the company has to be liquidated and those sales may still be company income for taxable purposes. Do you have a portion/room of your home office set for tax purposes as business property use? You may have to unravel some tax liabilities there.
Title: Re: Question For Those Who Have Closed Up Shop And Quit....
Post by: Gel-O Shooter on March 31, 2017, 18:42
"Do you have a portion/room of your home office set for tax purposes as business property use?"
Not anymore.  I quit last November.
 
How low would my income have to go before it would no longer be considered a business?   $50 a year?  $100? 
Title: Re: Question For Those Who Have Closed Up Shop And Quit....
Post by: SpaceStockFootage on March 31, 2017, 18:51
"Do you have a portion/room of your home office set for tax purposes as business property use?"
Not anymore.  I quit last November.
 
How low would my income have to go before it would no longer be considered a business?   $50 a year?  $100?


You can make less than $0 and you'd still be considered a business. Lots of companies make a loss during a tax year, but they're still businesses. Not entirely sure what you'd need to do to stop being a business... maybe remove all your items for sale. Maybe there is some magic hobby number you can get below. Maybe something else... not too sure.
Title: Re: Question For Those Who Have Closed Up Shop And Quit....
Post by: cascoly on March 31, 2017, 19:08
"Do you have a portion/room of your home office set for tax purposes as business property use?"
Not anymore.  I quit last November.
 
How low would my income have to go before it would no longer be considered a business?   $50 a year?  $100?
IANATL
any income +/- is just added to your other income,  in US reporting on sched C or E;  if your income from photography is consistently negative, then the IRS will consider it a hobby.  you need to show a profit in 1 year out of 4 or 5

the amt you can deduct for a home office is pretty small, so many don't bother even listing it
Title: Re: Question For Those Who Have Closed Up Shop And Quit....
Post by: Sean Locke Photography on March 31, 2017, 19:52
It's how much you make that's relevant, not the effort.

Inactive musicians with millions in royalties can't just claim it as a hobby unfortunately...

Actually, if you're not active, "royalties" do not get taxed as "income".
Title: Re: Question For Those Who Have Closed Up Shop And Quit....
Post by: SpaceStockFootage on March 31, 2017, 23:29
It's how much you make that's relevant, not the effort.

Inactive musicians with millions in royalties can't just claim it as a hobby unfortunately...

Actually, if you're not active, "royalties" do not get taxed as "income".

They've got to be taxed as something though. Surely the millions of dollars that Michael Jackson's estate generates every year isn't tax free, just because he's very much 'inactive'.
Title: Re: Question For Those Who Have Closed Up Shop And Quit....
Post by: DallasP on April 01, 2017, 16:52
They are taxed ... not the same way that regular earnings are I don't think. I'm not an accountant and can't even do bookeeping well and can still read that box 2 on this form that I'm sure we've all seen says "Royalties".
https://www.irs.gov/pub/irs-pdf/f1099msc.pdf (https://www.irs.gov/pub/irs-pdf/f1099msc.pdf)

In the case of the large estate or whatever, I think that is also taxed differently depending on if it's currently under a mortgage. Interest on mortgages has a tax credit or whatever, in which case you fill out a 1098.
Title: Re: Question For Those Who Have Closed Up Shop And Quit....
Post by: Sean Locke Photography on April 01, 2017, 17:11
Right, it's taxed differently.  As in not paying self employment taxes - ss, etc.

https://www.microstockgroup.com/general-stock-discussion/'royalties'-on-1099-misc/ (https://www.microstockgroup.com/general-stock-discussion/'royalties'-on-1099-misc/)
Title: Re: Question For Those Who Have Closed Up Shop And Quit....
Post by: increasingdifficulty on April 01, 2017, 18:06
Gel-O Shooter, are you in the US?

If so, I think only the Americans will be able to give you the right answer (I'm not one of them).

Naturally, taxation is MASSIVELY different in each country with rules and regulations that couldn't be further apart. Where I live, unfortunately, royalties still count as regular income and self-employment tax needs to be paid.

Maybe time to move to Monaco...
Title: Re: Question For Those Who Have Closed Up Shop And Quit....
Post by: PixelBytes on April 02, 2017, 16:06
I figured it should be taxed as royalties, since I stopped uploading a couple years ago, but my accountant says it still counts as a business.  I'm a sole proprietor, BTW.  I'm still making a living wage tho, so maybe that's why? 
Title: Re: Question For Those Who Have Closed Up Shop And Quit....
Post by: Gel-O Shooter on April 02, 2017, 16:09
I'm in the US.  And glad I have a whole year to figure this out.