Author Topic: income tax deductions (Read 5863 times)

mikeb · « **on:** March 05, 2007, 20:23 »

I am curious as to what you fellow microstockers deduct as far as photography equipment and expenses on your income taxes ?
Thanks for your input.

PenelopeB · « **Reply #1 on:** March 05, 2007, 21:39 »

In Canada:

I believe that the main equipment (camera, lenses etc) are considered a "capital expense" and are handled the same as buying a car in a company name. You can depreciate it a certain percentage per year, but you can't expense the whole thing in one year. Leasing equipment is different, you can expense the whole amount. I think your computer fall under the same rule as equipment.

What you can do is claim a certain amount of square footage of your home (including hydro, heat, insurance etc) if you use some of it as an office and studio, you can claim business mileage and certain auto expenses, if you use your car for business as well as personal use. Payment for models, props, studio rental, office supplies, telephone (only business portion) can be expensed. Any expenses that are "consumable" and not "assets" you can deduct.

You can pay yourself a wage (so long as the cash flow is there to start) and any "help" you hire as well, but this makes one subject to submitting payroll taxes and they are ruthless in Canada regarding making submissions on time or you can get heavy penalties.

In Canada, you can only expense a certain percentage for meals and they must be reasonable. You cannot expense things like manicures, hair cuts, clothes etc. (if you are the photographer, not the model)

I have done bookkeeping for 30 years, and still maintain my husbands corporate books and tax returns. I wasn't going to bother with the above yet, but I got a T5 from iStock, so this forced my hand and was able to come up with a good annual loss, which gave me a lower yearly income (from my day job income as a graphic designer) and thus - a tax refund.

A loss will only get you a refund if you have paid tax to start with.

eendicott · « **Reply #2 on:** March 05, 2007, 22:20 »

I'm in the U.S. - everything gets written off on schedule c of your income tax return. Read up on the passive activity rules. If it's passive income, then your deductions are limited to your income. If it's active income, then you can deduct as much as you want but you raise red flags if you don't make money 5 out of 7 years (the IRS will reclassify it as passive and you'll end up getting stuck with fines and penalties).

CJPhoto · « **Reply #3 on:** March 06, 2007, 02:35 »

What country are you in as this makes a big difference.

I am in the UK and I dont declare the income. This is technically correct for myself based on my particular situation. This will not work for UK citizens.

When I return to NZ, I will try to classify it as "hobby" income in which case it is not taxable.

This means I cant claim deductions.

leaf · « **Reply #4 on:** March 06, 2007, 02:58 »

yep, a country would help so the right person could pipe up here. None the less i will give my two bits for the norwegians.

I am registered as a business and I write off my camera / lenses / lights / computer and things (as long as the price is not over kr 15,000 you don't have to depreciate it every year, you can just write it off all at once). I also write off a portion of my internet costs.

rjmiz · « **Reply #5 on:** March 25, 2007, 01:34 »

I made a little over $4000.00 last year selling images on stock sites.
I've managed to write off all my equipment, and get a refund in my taxes
in excess of $2,300.00 this year.

This year I am taking a trip to Utah for about 2 weeks. All my expenses:
meals, gas, hotels, and misc. expenses will be a write off too. (for next year)
Why? Cause I'm going out there to take pics to sell on the internet stock sites!
Whether any of them sell is not the issue. Getting the write off and having fun
at uncle Sams expense is! YIPPIE!

rosta · « **Reply #6 on:** March 25, 2007, 03:08 »

I do a variation of what rmiz does. I deduct 75% of the cost of my camera equipment unless it is something used 100% for business such as my light tent) because it is used part time for personal photos, 25% of my computer, internet and cell phone (rest of time is being used by other folks or for school/fun), 100% of my website and exposure manager. I'm sure rjmiz is being honest on his taxes but...
I have been audited twice, before starting with stock work, and have won both times. based on that, plus doing the taxes for my husbands business for twenty years, I'd rather be conservative in claiming in usage amounts.

Clivia · « **Reply #7 on:** March 25, 2007, 03:23 »

I am in the UK, and I do other photography work beside stock sites. I deduct 33% of the cost of new equipment each year over three years, all travel costs, 20% of all light and heating costs in my home (because I have turned a spare bedroom into a small studio).
Last year I paid no tax on my photography income, but I expect to pay a small amount this year.
UK photographers need to be careful about falling into the VAT brackets, and being forced to charge VAT and pay it over to the government. This is worked out on your turnover, not your profit. Im nowhere near that area yet, but I imagine some people reading this could be.