If you want to save money on taxes – want to make sure you’re taking all the deductions you’re entitled to –want to see how you can be certain that you don’t overpay the IRS – and you want to learn this from an experienced, trusted expert in the field –             Julian Block’s Tax Tips 2008 for Stock Photographers gives you all this and more.           Julian Block has been singled out by the New York Times as a “leading tax professional,” and the Wall Street Journal calls him “an accomplished writer on taxes.” He has published many books on tax issues and often contributes to magazines such as Consumer Reports, Money, Parade, and Reader’s Digest.           Now, in co-operation with PhotoSource International, he is launching this 2008 tax guide tailored for stock photographers -- both professionals and part-timers – that is sure to save you money!                      Tax Tips 2008 consists of 70 pages full of useful money-saving information, inside tips, helpful hints and examples from real tax cases. Julian Block explains taxes and deductions in a way that makes them easy to understand. Again, to order this 70-page Report ($34.95) that will equip you to save money (and in effect earn money) on your taxes year after year – go to https://www.photosource.com/cart/taxtips.php or call our toll-free order line: 877 404-7790.

Some of the stock photography tax secrets this guide provides: When you need a model in your travel picture in Italy or Japan, why not have your spouse be the model? pages 15, 45 Use the N.O.L. factor (Net Operating Loss) from previous years to reduce your tax burden in a profitable year. page 66 Hire your son or daughter in your stock photography business, rather than outsource the job. It’ll be a two-way tax benefit. pages 48, 52 Work from home and enjoy reductions of expenses that are normally not available as deductions to an office worker. pages 43, 57 Write-Offs: Any business-related item (software, computer, office heat, telephone calls, lighting, air conditioning, etc.) is a

write-off. Does that include your car? page 12 Magazines, and workshops..a write-off? Yes, if they are business related. page 17 Don’t make a profit in three of the first five years you’re in business – are you red-flagged? Not always, especially if you can show your “intent” to make a profit. pages 20, 21 And remember the IRS always asks the question, “Did you spend the money you are claiming?” As a stock photographer you have irrefutable evidence: the actual photos themselves. Your photos are your receipts!

Here’s more of the kind of useful information you’ll find in Julian Block’s

 - 2008 Tax Tips Guide for Stock Photographers. 

IS IT A HOBBY OR A BUSINESS?

Q:  I've been into photography for ten years. I've spent a lot of money on digital equipment. Can this be a tax deduction for me?

A: Generally speaking, no deductions are allowed for hobbies unless your hobby is earning you some money. Turn your hobby into a business and reap the deduction benefits.

Q: Do I pay taxes on any profits that I make from my photography?

A: Yes, just as a regular business would.

Q: Are my expenses deductible?

A: Expenses such as software, scanner, camera, airline flights, office equipment, business faxes and phone calls, ISP fees, etc. are all deductible, but if your photography is deemed a hobby according to the IRS, they are deductible only up to the amount of income.

Q: What does that mean?

A:  Assuming stock photography is not your principle business and that you are employed elsewhere or are self-employed in a different type of business, you need to show your photography is a business, not just a hobby. (You have a photography business checking account, business stationery, records of photo submissions to markets, etc.  A business that is a real business and not a hobby can show a loss and use that loss to offset other income (even a salary) in figuring your taxes.

Q: How do I explain to the IRS that I'm trying to make my stock photography a real business?

A: Technically speaking, the IRS has a 3-year-year rule: if you do not show a profit for at least three out of five consecutive years, the IRS can declare your “business” to be a hobby and disallow any losses that you have declared.

Q: You mean I would have to pay a penalty?

A: Yes. But this would be a rare case. The IRS has been lenient in cases like this, especially in the area of the arts, such as photography. If your paper trail (your invoicing, purchasing, photo submissions, and income records) indicate to the IRS that you have shown "intent" to make a profit, and you are not abusing the Tax Code, the IRS will no doubt approve your deductions. In fact many small businesses go many years without showing a profit.

Q: How can I best show that I "mean business?"

A: Open a checking account in the name of your business. Apply for and get a Tax I.D. number (it's free). Contact a printer and order professional-looking stationery, business cards, and invoices. Set up a website, get a local "dba" (“doing business as”) license.

Q: To get my pictures I have to travel far and wide. Is my travel expense a deduction?

A: Again, if you can show the IRS that "you mean business" by operating it in a professional manner, and you are contacting markets to sell your photos, (sending out emails, inviting potential customers to your website) your chances are good that all travel deductions for your photography-related trips will be deductible. Expenses that are not related to your stock photography business while on the trip are definitely not eligible as a tax deduction. As for receipts, your pictures are additional good receipts because they show that you actually traveled to the place you reported.

Txtct71b

 

SALES TAX

Q: Is there a federal sales tax on the images I sell through the Internet?

A:  There is no federal sales tax and never has been, as of this writing.

41 states, however, have a state sales tax law. If you sell one of your images to someone who lives in your own state, and if your state has a sales tax law (you'll know if you've been paying sales tax at a retailer), then you'll be required to charge a sales tax to your client. If your customer does not live in your state, you are not required to charge them a sales tax, unless you happen to have an office (it's called "nexus", or "presence") in your customer's own state. Information about how to apply for a state sales tax license is available through your state's department of taxation.

Q: If I'm just renting my stock photos (not actually selling them) to a client in my own state for publication, am I required to charge a sales tax?

A: Each state interprets this situation differently. It's best to check with the Department of Taxation in the state where you live.

Q: I heard they are extending an Internet ban on nationwide Internet taxes. Will this affect my stock photo sales?

A: At present, there is no taxing structure for e-commerce sales per se. A 1992 Supreme Court decision blocks states from collecting taxes from catalog, telephone or on-line sales unless the retailer has a physical presence in the state. Many state governments want authority to collect taxes on Internet on-line sales similar to those they collect from retail stores. The states are concerned that rising e-commerce will erode their tax base that pays for schools and emergency services. But Internet retailers say it is too difficult to set up collections for 7,000 taxing districts.

So for now there is a ban on states trying to collect taxes on Internet sales. This may change. The Internet Non-Discrimination Act also bans Internet access taxes and other multiple and discriminatory on-line taxes. To keep up-to-date on this subject, use a search engine such as Google.

Txtct76a

Depreciation of Your Images

Q: The stock photos that I take seem to have a shelf life of about five years. After that they have gone out of style and are out-dated. If I take about 2,000 pictures every year, can I depreciate images that are older than five years?

A:  The only business I know of that can depreciate the intangible worth of its commodity is major league baseball. Owners get to write off a large portion of their player costs as depreciation. It's a special perk reserved for the sports world. Depreciating creative content such as photos might not get the blessings of the IRS. You would have to be able to prove that all of your photos are worthless after five years. To the contrary, we all know that some photos appreciate in value after many years, sometimes for their historical significance and others for their fine art value.

Txtct77a