Whether you are a freelancer or run your own full-time business, filing taxes as a photographer can be daunting. In this business, you are occupied with thoughts related to your next location, weather forecasts for outdoor work and final edits. Taxes are probably the last thought on your mind.
Photography, for many, often starts as a hobby and is also considered a non-taxable side hustle. However, the hobby could quickly scale into a full-fledged business. With Beem, America’s first Al-powered Smart Wallet App, you’ll be able to file your taxes as a photographer for free. Given below is a guide to help you easily navigate your tax filing process.
Basics Of Taxes As A Photographer
A good rule, for any photographer confused about their taxes, is to identify if your photography is a business attracting taxes and when you should start charging your clients for a profit. You must carefully follow the complex regulations to minimize the tax burden as much as possible.
If you are working as an employee, your taxes will be automatically withheld from your paycheck by your employer. However, taxes for freelance or self-employed photographers are different. As a self-employed photographer, you will have to responsibly withhold and pay your own taxes.
Importance Of Filing Taxes
Establishing your photography as a business will attract a lot of benefits when it comes to filing your taxes. This will be in addition to inviting more clients and charging higher in a legitimate manner.
Whether you are running a Limited Liability Company (LLC) or are just self-employed, you will either have to pay your own estimated taxes each quarter or hire a professional to help you. If you are uncertain about being required to pay your taxes, you will have to file an annual tax return if your income from the photography business earns you more than $400 a year. You are also required to pay an estimated tax every quarter if your tax liability for the year is more than $1,000.
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Self-Employment Taxes For A Photographer
To protect yourself from IRS fees while involved in self-employment, you should plan to pay your quarterly tax estimates. It is also important to be well-informed about the self-employment tax.
The self-employment tax is at 15.3% of your total pre-tax earnings in the 2023 tax season. It consists of 12.4% and 2.9% for Social Security and Medicare respectively, which for regular employees is cut from their paycheck by their employers. If you are a freelancing photographer, you will pay this tax when filling out your federal tax return.
When you own your own business, you are responsible for paying the entire 15.3%, which when you are working for someone else is half paid by your employer. The self-employment tax is uncompromising and there is no way out of the 15.3% if you are self-employed. Even if your photography business is a side hustle and may not be your primary source of income, you still owe 15.3% of your original profits to the government.
Forms For Filing Taxes As A Photographer
While a tax professional could be of crucial help while filing taxes, knowing about the forms you need to fill out and the important deduction from your taxes is more than enough information you need to do it yourself. Knowing about the required forms is important as you’ll be using them during every tax season.
Here are the key forms you will require during the 2023 tax season as a self-employed photographer in the US.
- Form 1040: You will have to fill up your gross income from photography, deductions and tax credits in this form.
- Schedule C: It is one of the most important forms for you as a photographer looking for necessary deductions. The form allows you to detail all the expenses you had to shell out to scale your business. These expenses can be deducted from your total tax amount. You can also report your income, costs to travel, equipment and other such expenses.
- Schedule SE: Social Security and Medicare are the major proponents of the annual taxes, regular employees have this handled. However, if, as a self-employed photographer, you are worried about calculating your Social Security and Medicare tax amounts? This form will help you navigate through it. The form also comes with a flow chart to assist you better in utilizing the form better.
- Form 8829: Deductions are a major way to reduce your tax burden, and one such deduction comes from leasing, renting or having a separate office to conduct your business. However, many photography businesses are run out of homes. If you too are running your business from home and still want to make use of this deduction, Form 8829 will do the exact thing for you. It is important to note, however, that you can only deduct the amount of your home’s value that you use only for your photography business. In addition, the area in your home will also have to be dedicated only to conducting your business.
- Form 4562: Running a photography business will require you to make repeated investments in equipment that gets outdated fast. When you buy high-end equipment, you should consider it to be an investment in your business rather than just an expenditure. Form 4562 helps in reporting the depreciation in value of your equipment, which can be used to deduct a certain amount from your taxes.
Tax Deductions For Photographers
Tax deductions are the best way to reduce the taxes you have to pay. However, deducting these expenses doesn’t mean you don’t have to pay for them. It only reduces the amount of your cumulative income declared.
Photography requires expensive equipment like cameras, stands and tripods, film supplies, lenses, computers and lighting, among other things. Any equipment you purchase or rent can be considered a deduction from your taxes. You can maintain a spreadsheet to track all the details of your equipment to make it easier for you during the tax filing season.
Expenditure in renting and maintaining a studio or storage unit, which is important for any photographer making a business in it, can also be deducted from your tax.
You can claim a deduction only for that portion of your house used for business. The list of deductible options also includes travel, office supplies, training, meals, legal expenses, marketing and promotions and other costs.
Other business-related costs include website fees, credit card fees, licenses for your work, editing software and insurance costs of equipment. These can also be deducted from the 15.3% tax amount of your total declared income.
Ensure not to overextend your deduction claims and follow the specified tax guidelines to avail all the benefits.
Planning, filing and paying your taxes while managing your photography business can feel scary. However, if you invest a little time in organizing your documents, you will be more prepared during the tax season.