Author Topic: Taxes (Read 7553 times)

Cricket · « **on:** March 11, 2016, 13:40 »

Hey All

I am a photog based in the USA... and I got a question. Some of the agencies don't report your stock earnings to the IRS... so do I need report these earnings to my accountant?

Cricket

enstoker · « **Reply #1 on:** March 11, 2016, 13:48 »

Do you remember Al Capone?

Mantis · « **Reply #2 on:** March 11, 2016, 13:57 »

If the income is less than $600 then no. If over then you should because you don't want to hassle fighting the irs if you intentionally cheated them, let alone unintentionally. I don't think it matters, ignorance isn't a defense. As much as it pains me, I report it all.

w7lwi · « **Reply #3 on:** March 11, 2016, 21:10 »

Regrettably the preceding advice is incorrect. There was (and still is) an old belief that you were only issued a 1099-MISC if the royalty was $600 or greater. The actual IRS code now states that if you received royalty income, which is how microstock earnings are classified, of $10.00 or more a 1099-MISC is supposed to be issued. For whatever reason, many agencies tend to ignore this requirement. Regardless of whether or not you receive a 1099, you are required by US law to report all income received, no matter how small the amount. So keep detailed records of all monies received. You, not the agency, are responsible for reporting it all to the IRS.

Sean Locke Photography · « **Reply #4 on:** March 11, 2016, 22:00 »

That is also incorrect. Royalties, while you are actively involved in producing content, are not 'royalties' as far as the IRS is concerned for reporting. It is just 'income'. Which is probably why they wait for the $600 threshold to file.

w7lwi · « **Reply #5 on:** March 12, 2016, 11:12 »

Quote from: Sean Locke Photography on March 11, 2016, 22:00

That is also incorrect. Royalties, while you are actively involved in producing content, are not 'royalties' as far as the IRS is concerned for reporting. It is just 'income'. Which is probably why they wait for the $600 threshold to file.

Sean, unfortunately this is also incorrect. Take a look at any 1099-MISC from any agency and notice all earnings are listed in box 2 which is reserved for royalties. The following is an excerpt from the IRS instructions to companies that are in the business of selling works created by others:

Use box 2 to report royalty payments from intangible property such as patents, copyrights, trade names, and trademarks. Report the gross royalties (before reduction for fees, commissions, or expenses) paid by a publisher directly to an author or literary agent, unless the agent is a corporation. The literary agent (whether or not a corporation) that receives the royalty payment on behalf of the author must report the gross amount of royalty payments to the author on Form 1099-MISC whether or not the publisher reported the payment to the agent on its Form 1099-MISC.

Our images are copyrighted works being sold by our agents (Envato's claims not withstanding). Thus any earnings derived from them are considered royalty payments to us and is the reason all 1099-MISC forms show these earnings as such.

Sean Locke Photography · « **Reply #6 on:** March 12, 2016, 11:29 »

Ok, back when I investigated this, I was still exclusive at IS. However, I still belief anyone reporting this on a 1099 as "royalties" is incorrect. See this thread:
http://www.microstockgroup.com/general-stock-discussion/'royalties'-on-1099-misc/

Point is, when reporting "royalties", they go on Schedule C as income, not Schedule E as royalties, because, iirc, current income on C is subject to self employment tax and other things, and royalties on E aren't. And the IRS isn't likely to enjoy you trying to stiff them from taxes on current income.

Mantis · « **Reply #7 on:** March 12, 2016, 15:29 »

Quote from: Sean Locke Photography on March 12, 2016, 11:29

Ok, back when I investigated this, I was still exclusive at IS. However, I still belief anyone reporting this on a 1099 as "royalties" is incorrect. See this thread:
http://www.microstockgroup.com/general-stock-discussion/'royalties'-on-1099-misc/

Point is, when reporting "royalties", they go on Schedule C as income, not Schedule E as royalties, because, iirc, current income on C is subject to self employment tax and other things, and royalties on E aren't. And the IRS isn't likely to enjoy you trying to stiff them from taxes on current income.

I just had my taxes done this morning and this is how it was handled.

w7lwi · « **Reply #8 on:** March 12, 2016, 21:34 »

OK, I think we are saying the same thing, just in a different fashion.

I have royalty income from multiple sources other than just microstock so I need to address both cases. For microstock, there is a place on schedule C to enter all 1099-MISC royalty income. This income does not go on schedule E. As you say, this income is subject to self- employment tax. My other royalty income, which is also reported on a 1099-MISC is entered on schedule E. The IRS rules I noted above are for the person/group issuing the 1099-MISC to us. It says the payments should be reported as royalty and that a 1099 should be issued if the sum of all payments equals or exceeds $10.00. My other royalty payments fall under the $600 minimum requirement so I handle them differently. It is up to us to report these payments in the correct schedule (C or E) so the appropriate tax may be assigned. Of course all this presupposes we are handling microstock income as a business, this requiring a schedule C. This is how my tax attorney has been handling this for several years and, to date at least, we've had no issues with the IRS.

PixelBytes · « **Reply #9 on:** March 13, 2016, 14:35 »

Quote from: Sean Locke Photography on March 11, 2016, 22:00

That is also incorrect. Royalties, while you are actively involved in producing content, are not 'royalties' as far as the IRS is concerned for reporting. It is just 'income'. Which is probably why they wait for the $600 threshold to file.

This is what my accountant told me too when I asked about claiming my Mico earnings as royalties.

einfall · « **Reply #10 on:** March 13, 2016, 14:38 »

einfall · « **Reply #11 on:** March 13, 2016, 14:38 »

Are here Slovakian contributors?

wordplanet · « **Reply #12 on:** March 14, 2016, 13:17 »

The important take away here is that whether or not you receive a 1099, the sums you make from microstock are income that needs to be reported to the IRS.

I believe that the those who have said the royalties reported to you from the agencies should be treated as income on a Schedule C are correct but you should always check with your accountant - I'm giving you the benefit of my opinion here and am not an accountant, but there is no $10 or $600 minimum threshold before you have to report microstock income to the IRS, even if there are minimums before the agencies have to report them to you.

If you don't file a Schedule C it's still income.

No opinion as to how stock royalty income is to be treated for those not in the US.

Hongover · « **Reply #13 on:** March 14, 2016, 14:05 »

Anyone have any idea on how income (over $600) earned one on foreign website, but never gets reported to IRS are treated? They don't send out 1099s and they have no mention of taxes on their website at all.

Tax time is so stressful. It's enough that the agencies take a large cut, but the IRS want their cut too, so they can waste it on programs that benefits the lazy and incompetent. As I earn more and more on micrstock, I feel like I may have to pay the government next year instead of getting a return.

Sean Locke Photography · « **Reply #14 on:** March 14, 2016, 14:12 »

Quote from: Minscer on March 14, 2016, 14:05

Anyone have any idea on how income (over $600) earned one on foreign website, but never gets reported to IRS are treated? They don't send out 1099s and they have no mention of taxes on their website at all.

You report it, like any other income.

wordplanet · « **Reply #15 on:** March 14, 2016, 14:14 »

Quote from: Sean Locke Photography on March 14, 2016, 14:12

Quote from: Minscer on March 14, 2016, 14:05
Anyone have any idea on how income (over $600) earned one on foreign website, but never gets reported to IRS are treated? They don't send out 1099s and they have no mention of taxes on their website at all.

You report it, like any other income.

+1

S.Y. 962 · « **Reply #16 on:** March 29, 2017, 23:08 »

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Author Topic: Taxes (Read 7553 times)

Cricket

enstoker

Mantis

w7lwi

Sean Locke Photography

w7lwi

Sean Locke Photography

Mantis

w7lwi

PixelBytes

einfall

einfall

wordplanet

Hongover

Sean Locke Photography

wordplanet

S.Y. 962

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