claiming stock photo income

If I were to start selling my images on stock photography websites how would that be done on my tax return at the end of the year (located in the US)?
Do I need to start a business and claim it that way or can i just add it to my personal income tax return? Also, wont this make my tax bracket higher (ie - I will have to pay more at the end)?
What is the best way to handle this? I guees I will just need to put aside a portion of that money (say 30%?) into savings so when the tax man cometh I will have it saved already?
Do I even have to claim it on taxes?

RiveraRa wrote in post #2939546
If I were to start selling my images on stock photography websites how would that be done on my tax return at the end of the year (located in the US)?
Do I need to start a business and claim it that way or can i just add it to my personal income tax return? Also, wont this make my tax bracket higher (ie - I will have to pay more at the end)?
What is the best way to handle this? I guees I will just need to put aside a portion of that money (say 30%?) into savings so when the tax man cometh I will have it saved already?
Do I even have to claim it on taxes?

You DEFINATELY have to claim it on taxes. If you break into your neighbor's house and steal $5,000 worth of their jewelry, the IRS expects you to claim that in your taxes. You have to claim all income in your taxes, no matter what.

You need to find a "tax man" and get some professional advice. You certianly need to claim the income portion but you also need to deduct the expenses of obtaining that income - your equipment can be depreciated and your costs expensed. This is an important area that requires expertise that most, especially me, do not have. Good luck, glad you have this problem. Dennis

RiveraRa wrote in post #2939546
If I were to start selling my images on stock photography websites how would that be done on my tax return at the end of the year (located in the US)?
Do I need to start a business and claim it that way or can i just add it to my personal income tax return? Also, wont this make my tax bracket higher (ie - I will have to pay more at the end)?
What is the best way to handle this? I guees I will just need to put aside a portion of that money (say 30%?) into savings so when the tax man cometh I will have it saved already?
Do I even have to claim it on taxes?

depends if the stock photo sites will issue you a 1099 or not. if not, then you'll have to add that amount to your federal income tax and claim it in schedule C. regardless if you own a business or not, if you make excess income, that's considered you as operating a small business.

i did some consulting work for a tech firm last year and got a 1099-misc. it bumped up my tax bracket and ended up oweing the man quite a lot of benjis.

so, bottom line, either check with a tax man or lady, or if you get turbotax deduction maximizer.. it'll walk you through it.

EOS mE wrote in post #2941862
depends if the stock photo sites will issue you a 1099 or not. if not, then you'll have to add that amount to your federal income tax and claim it in schedule C. regardless if you own a business or not, if you make excess income, that's considered you as operating a small business.

So if the IRS considers me as operating a small business because I made some extra income then I should be able to write off part of equipment, time, etc as a business expense like Dchemist said. I think I need to get a taxman.

What is everyone paying their taxman? I know you will need to pay for them to write up and file your taxes but what about consultations such as this? Do they do anything throughout the year for you or do you only hear from them come tax season?

RiveraRa wrote in post #2944013
So if the IRS considers me as operating a small business because I made some extra income then I should be able to write off part of equipment, time, etc as a business expense like Dchemist said. I think I need to get a taxman.

What is everyone paying their taxman? I know you will need to pay for them to write up and file your taxes but what about consultations such as this? Do they do anything throughout the year for you or do you only hear from them come tax season?

if you want to write off your equipment.. then i think you will need to have a business license then. but still check with your tax man though. or get a tax lady..

you dont need a B-License to write off business equipment and expenses for the federal Government. Just use your Schd. C. Use depreciation for Camera Gear and Computers (unless they are "replacement" but there is an associated denial risk and penalties with interest risk with that approach), also uses the various expenses for your various expenses (milage, meals, supplies . . .). Remember dont take computers as 3 year depreciation, 5 or more. IRS says five so thats what you have to use.

It would be wise to pull all of your capital purchase receipts and make a spread sheet of cost, serial numbers, place of purchase, invoice number, repairs . . ., everything. You can then figure out your depreciation and maintiance cost via these sheets and really show expenses and depreciation. Remember you can have book and tax depreciation too. Work as much stuff to your advantage as you can. Try and get enough this year, but remember to plan your taxes well too. A 100 savings this year, might mean you owe 100 in the next 4 or 5, so becareful and dont corner yourself in future periods. If you have never done your taxes dont start now. Take them to the tax man. They can help guide you.

To get my taxes done was 97.00. I ended up with 0 Adjuested Gross Income and am getting a hefty reutrn (~2500). I get to look forward to deducting 906 dollars off my AGI for the next 6 years, plus what ever i add this year and subsequent years. This was also my first "official" year in "business", but i actaully wont start making any sort of profit until late this year or next year.

The absolute most important thing is keep spectacular records. Log everything. Hours shooting, touching photos, trying to sell, trying to print, building websites. Act as a business in a business manor and you can possibly skirt the make money in 3 of the first 5 rule the IRS has if you can demonstrate a business like setting. (seek advice from a CPA before trying this).

Good luck.

Edit: i just re-read the first post. Make sure you know how your being paid. Depending on the payment details you may need to adjust how you claim. If they do not take taxes out right away, you may need to send payment into the IRS. There is a penalty (i believe, meaning its been two years since my tax class in this is a little fuzzy) if you owe more then 10% of your bill at the end of the year. But check with an Accountant on that one. I cant remember the rules and im really being lazy by not checkin the IRS.gov website.

First hire an accountant. 100-200 would cover that, and deductable.

next keep records of everything.

let the taxman figure it out!!! LOL

Really not hard
sell a picture for 1.00
cost you .75 to make picture
you have to pay tax on the .25

Bob

But depending on where you are and what state you live in you might have to act as the tax collector if you sell your photo. say you sell your print for a dollar and tax is 8% you then need to collect .08 making the total cost 1.08. Just remember that and read up on if services are taxable.

They will probably give you advice for as little as $25.
Suggestions:
Don't deduct for a home office if it doesn't come to much. The IRS uses that to decide who to audit, & when they do it once, they NEVER stop.
If you can put some $s in a traditional IRA, it will help to reduce what you have to pay.

holrd wrote in post #2945160
you dont need a B-License to write off business equipment and expenses for the federal Government. Just use your Schd. C. Use depreciation for Camera Gear and Computers (unless they are "replacement" but there is an associated denial risk and penalties with interest risk with that approach), also uses the various expenses for your various expenses (milage, meals, supplies . . .). Remember dont take computers as 3 year depreciation, 5 or more. IRS says five so thats what you have to use.

Not true. You can take the entire cost the year you actually purchase it. I'm not certain what the difference is, but my accountants have ALWAYS taken the entire cost.

I go through a computer every year or two - it wouldn't make sense to depreciate them over five years.

I'm not an accountant, but I hire good ones, and they've taken the full amount each year.

straight from IRS

If you are using Sec. 179 then yes you can, but in general if you are not meeting a certain income level you cant.

i go by the casino rule, if its over $10,000 claim it if not shhhhhh...

HoRnYTuRbO wrote in post #2955033
i go by the casino rule, if its over $10,000 claim it if not shhhhhh...

I "know a guy" who made quite a bit of money working for a company in the UK (the guy resides in the U.S.), and since the UK couldn't care less about our tax system, it's not like they send him a 1099...

holrd wrote in post #2945160
you dont need a B-License to write off business equipment and expenses for the federal Government. Just use your Schd. C. Use depreciation for Camera Gear and Computers (unless they are "replacement" but there is an associated denial risk and penalties with interest risk with that approach), also uses the various expenses for your various expenses (milage, meals, supplies . . .). Remember dont take computers as 3 year depreciation, 5 or more. IRS says five so thats what you have to use.

It would be wise to pull all of your capital purchase receipts and make a spread sheet of cost, serial numbers, place of purchase, invoice number, repairs . . ., everything. You can then figure out your depreciation and maintiance cost via these sheets and really show expenses and depreciation. Remember you can have book and tax depreciation too. Work as much stuff to your advantage as you can. Try and get enough this year, but remember to plan your taxes well too. A 100 savings this year, might mean you owe 100 in the next 4 or 5, so becareful and dont corner yourself in future periods. If you have never done your taxes dont start now. Take them to the tax man. They can help guide you.

To get my taxes done was 97.00. I ended up with 0 Adjuested Gross Income and am getting a hefty reutrn (~2500). I get to look forward to deducting 906 dollars off my AGI for the next 6 years, plus what ever i add this year and subsequent years. This was also my first "official" year in "business", but i actaully wont start making any sort of profit until late this year or next year.

The absolute most important thing is keep spectacular records. Log everything. Hours shooting, touching photos, trying to sell, trying to print, building websites. Act as a business in a business manor and you can possibly skirt the make money in 3 of the first 5 rule the IRS has if you can demonstrate a business like setting. (seek advice from a CPA before trying this).

Good luck.

Edit: i just re-read the first post. Make sure you know how your being paid. Depending on the payment details you may need to adjust how you claim. If they do not take taxes out right away, you may need to send payment into the IRS. There is a penalty (i believe, meaning its been two years since my tax class in this is a little fuzzy) if you owe more then 10% of your bill at the end of the year. But check with an Accountant on that one. I cant remember the rules and im really being lazy by not checkin the IRS.gov website.

wow.. i thought you need to have a business license to write off your equipments.. *yes, i'm tax accounting challenged...*