It time to do our taxes again. It is not the most pleasant time for many of us. Photographers should know what expenses they can claim. There are also other tips and tricks to help them through this horrible time. Some will be sending the stuff off to someone else to deal with. Others will be putting pen to paper and trying to tackle their taxes on our own. No matter which way you want to turn there are a few resources and tips to know before you start. These are some tips that have come straight from the best financial services in the country.
There are many forms required when you have your own business. Being a photographer requires you to have many forms included in your taxes. Most of these forms are straightforward. It’s a matter of entering number after number into those tiny little rectangles. The first form required is a Schedule SE. It reports the Medicare and social security taxes. The next one is Form 2106. This form is for mileage and travel conducted throughout the year for work. You can use the standard mileage or the actual mileage. Try doing it with both and see which one is better for your circumstances. Form 8829 is for using your house for business purposes. It will ask the size of a home office and will credit a part of your mortgage or rent for the use. Form 4562 is for depreciation and use of any equipment you may have purchased.
Make sure you always keep receipts for everything. Even if it is a meal while you are on a business trip. If it’s counted for business then it is an expense you can count on your taxes. There anonymous expenses that are accounted for when you have your own business. Financial advisers such as Rusty Tweed can give many pointers on filing taxes. They state that everything should be gone over many times. The first expense to remember is the travel expenses. This includes not just the flight but hotel payments, food, admission into places and more. Anything that’s geared towards the business. The next expense to remember is mileage. The IRS calculates 54.5 cents for every mile that’s driven for work. This can add up fast. Some states have a higher mileage rate that’s used when filing state taxes. Meals are another thing that’s calculated as well as the depreciation for equipment. Tax financial services say using Section 179 of the tax code enables you to reduce your income. This is by deducting ALL equipment purchased. This also includes equipment that is being financed as well. Being a photographer can get pricey when it comes to equipment. Certain things like cameras, lights, stands, backdrops, and others are expensive. Remember that the deduction cannot exceed over $2,000,000. Another expense that many photographers don’t count is education. Maybe there was a class that you went to about lighting or a tutorial about backdrops. You can count those as well.
At the end of the year owning your own photography business may mean that you have to pay taxes. This is because taxes are withheld from paychecks for those that work for someone else. You can avoid the extra penalties that are added on to what you owe by making payments. You will be making payments either way in most cases. This means that you can be paying your taxes throughout the year instead of it coming due to all at once. It will not only save you money but a lot of headaches too.
There are many mistakes that financial experts such as Rusty Tweed warn. Not only at tax time but throughout the year as well.
The first is collecting sales tax. This is for tangible products only. That means if you develop anything for a client such as a CD with pictures then it is tangible. This includes prints or thumb drives as well. If it’s held in your hands then they consider it a tangible product. The second thing that many people don’t remember is to always save receipts. These are what you go by when it comes to your deductions. Next is to remember that there will always be self-employment tax to pay. This is beside the regular taxes paid. This is because when employed by a company they pay part of the Medicare and social security taxes. If you are self-employed then you’re required to pay the full amount. Don’t use the 1040EZ form. It does not give the options for deductions that can help someone who is self-employed. Remember that state taxes are also written off as an expense on your federal taxes as well.
There are many tips that photographers can pick up on so that their taxes will be less messy. It will help create a more smooth transaction with fewer hiccups.