Taxes and Income

kdspencer

Hi Everyone,

I hope this is the right place to ask my question... it's in regards to taxes.

I'm relatively new to the photography business, and this year I've racked up a lot of expenses with equipment to get me off the ground. Since I have only been selling on my smugmug site for the past month or two, I have a made a whopping profit of about $25. (woohoo!)

My question is... that is $25 that I made in the year 2008, however, I likely won't get a check until 2009. But having some income to put up against the expenses for 2008 will be a good thing for tax purposes (the government likes it when you can show a little income for all the expenses you're claiming). How is this handled with smugmug? When I receive my tax statement, will it reflect that I made some income in 2008, even though I won't receive my check until 2009?

Scott_Quier

Just Six Words ...
Find and hire a tax professional.

Photographers are not the people to ask tax questions of.

ChatKat

Scott_Quier wrote:

Find and hire a tax professional.

Photographers are not the people to ask tax questions of.

That is true, unless the photographer is also an accountant....

If you are what is called a cash basis taxpayer (most of you are) then you report income when you take what is called constructive receipt - meaning the money is available to spend!

If you officially set your business up this year, then by all means, you can write off your expenses and depreciate your equipment. YOu would need to prove intent to make a profit. You would not want to take a loss for more than 3 out of 5 years.

The most critical thing you can do is keep very very good records. QuickBooks or Quicken are ideal for photographers.

kdspencer

Hi guys, thanks.

I guess I asked the question wrong. My husband is actually our accountant (we actually use Quicken/TurboTax), so there are no issues on the accounting end... more of a question of how Smugmug does it. We don't think I can claim income unless it has been given to me during that calendar year... however, I will have been designated the income, but Smugmug hasn't sent it to me yet. So, will the tax statement they send reflect that I made the $25 (even though I don't have a check in hand), or will it hold it over until 2009 taxes as they haven't sent it to me and I don't actually have the income in my hand yet.

I hope I'm making sense... it's kinda a complicated question, but more about the process of what Smugmug does than about how to do my taxes.

Thanks!

ChatKat

When it's available to you it's been received. You don't have it - it's not income.

kdspencer wrote:

Hi guys, thanks.

I guess I asked the question wrong. My husband is actually our accountant (we actually use Quicken/TurboTax), so there are no issues on the accounting end... more of a question of how Smugmug does it. We don't think I can claim income unless it has been given to me during that calendar year... however, I will have been designated the income, but Smugmug hasn't sent it to me yet. So, will the tax statement they send reflect that I made the $25 (even though I don't have a check in hand), or will it hold it over until 2009 taxes as they haven't sent it to me and I don't actually have the income in my hand yet.

I hope I'm making sense... it's kinda a complicated question, but more about the process of what Smugmug does than about how to do my taxes.

Thanks!

kdspencer

Gotcha. That's what I figured. Thanks!