IRS question from non-professional

flyingdutchie · February 2, 2006

I'm not a professional photographer. I'm an amateur.
However, if i sold a few pictures and i a want to get paid, i must fill out the forms, send them to smugmug and they report it on their 1099 and smugmug can pay me the profit of my sales.

Does this mean that i must add the profit of my picture sales to my income?

I have not (and will not in the near future, i think) make enough sales to even pay for the purchases and/or depreciation of my photo-equipment. If i have to report my picture sales to the IRS, can i deduct purchases/depreciation of my equipment?

Thank you.
(PS: i tried a search on the forums about this, but both IRS and tax as search criteria are not possible... too short)
-- Anton.

Art Scott · February 2, 2006

flyingdutchie wrote:

I'm not a professional photographer. I'm an amateur.
However, if i sold a few pictures and i a want to get paid, i must fill out the forms, send them to smugmug and they report it on their 1099 and smugmug can pay me the profit of my sales.

Does this mean that i must add the profit of my picture sales to my income?

I have not (and will not in the near future, i think) make enough sales to even pay for the purchases and/or depreciation of my photo-equipment. If i have to report my picture sales to the IRS, can i deduct purchases/depreciation of my equipment?

Thank you.
(PS: i tried a search on the forums about this, but both IRS and tax as search criteria are not possible... too short)
-- Anton.

Actually talk to to your tax person...it is tax time.....It really depends on how much you earn....by the strictest since of taxation (sometimes without representation) you must claim ALL earnings but, your tax pro will be the best person to talk to.

Good luck.

Andy · February 2, 2006

flyingdutchie wrote:

Thank you.
(PS: i tried a search on the forums about this, but both IRS and tax as search criteria are not possible... too short)
-- Anton.

Google Site Search for three-letter words

Here are just a few threads that popped up:

http://www.dgrin.com/showthread.php?t=2870
http://www.dgrin.com/showthread.php?t=5990
http://www.dgrin.com/showthread.php?t=5196

mercphoto · February 2, 2006

flyingdutchie wrote:

Does this mean that i must add the profit of my picture sales to my income?

Not being a tax professional, I do believe the answer to your question is "yes". It was income. Income must be declared.

However, jobs that derive a portion of their wages on tips are common for under-reporting income. I believe (but could be wrong) that any money you get from holding a garage sale is taxable income as well, but who reports that? For that matter it might technically be taxable sales, too, but who does that?

Obviously not all income is reported.

Yet another reason to tell your elected officials to implement the Fair Tax.

Stormdancing · February 2, 2006

I'm not a CPA, but I have just finished preparing and sending out 1099's for our business here.
Generally if you were not paid more than $600.00, you would not receive a 1099.

If you have received income from several different sources totalling $400 or more for your photos, I would be very careful about this.
http://www.irs.gov/faqs/faq4-3.html

It's always best to check with your tax pro. You can also call the IRS concerning this, but they do not guarantee their answers to be correct.

1-800-829-1040

http://www.irs.gov/instructions/i1099msc/ar02.html#d0e620
Box 7. Nonemployee Compensation

Enter nonemployee compensation of $600 or more. Include fees, commissions, prizes and awards for services performed as a nonemployee, other forms of compensation for services performed for your trade or business by an individual who is not your employee, and fish purchases for cash. Include oil and gas payments for a working interest, whether or not services are performed. Also include expenses incurred for the use of an entertainment facility that you treat as compensation to a nonemployee. Federal executive agencies that make payments to vendors for services, including payments to corporations, must report the payments in this box. See Rev. Rul. 2003-66, which is on page 1115 of Internal Revenue Bulletin 2003-26 at www.irs.gov/pub/irs-irbs/irb03-26.pdf.

mercphoto · February 2, 2006

Stormdancing wrote:

It's always best to check with your tax pro. You can also call the IRS concerning this, but they do not guarantee their answers to be correct.1-800-829-1040

Wish I could run by business the way the government can!

flyingdutchie · February 2, 2006

mercphoto wrote:

Wish I could run by business the way the government can!

And even tax pros can get it wrong. I've seen that happen. But at least they have a reputation (their livelyhood) to worry about.

Calling the IRS may get you the wrong answer, using a tax pro may not work either... tricky tricky tricky

Anywho's:
Thank you all very much for your answers! I appreciate it.

galla47 · February 2, 2006

Here is another place to start

IRS publication 17.

Do a search on hobby within that publication. There is a provision for hobby income. You must include this income in your taxes, however, you can deduct some hobby expenses you have to offset income.

You'll have to read the publication or talk to a tax professional to know exactly what you can deduct.

JimM · February 2, 2006

If you are sent a 1099 from SM, then that is also being sent to the IRS... so, yes, I would report it as income. As soon as you start doing this, it would only make sense to track expenses (equipment, mileage, entrance fees, hosting fees, etc) to off-set this income and maybe even generate a net loss that will help you get more money back when you file your returns.

I recommend meeting with a tax planner (and keeping receipts).

flyingdutchie · February 2, 2006

galla47 wrote:

Here is another place to start

IRS publication 17.

Do a search on hobby within that publication. There is a provision for hobby income. You must include this income in your taxes, however, you can deduct some hobby expenses you have to offset income.

You'll have to read the publication or talk to a tax professional to know exactly what you can deduct.

Reading (searching for the work 'hobby' in) p17.pdf, it seems that i need to report the hobby-income, since smugmug is reporting it to the IRS as well

, and then i can deduct hobby-expenses as long as they are never higher than the hobby-income (page 193).

That is actually not hard to understand!!

Thank you for this link.
-- Anton.

mercphoto · February 2, 2006

flyingdutchie wrote:

That is actually not hard to understand!!

This is eaiser

http://www.amazon.com/gp/product/0060875410/sr=1-1/qid=1138917963/ref=pd_bbs_1/103-0025288-2280642?%5Fencoding=UTF8
Sorry, couldn't resist. Can anybody tell I hate the current tax system?

Bodley · February 2, 2006

mercphoto wrote:

This is eaiser
http://www.amazon.com/gp/product/0060875410/sr=1-1/qid=1138917963/ref=pd_bbs_1/103-0025288-2280642?%5Fencoding=UTF8
Sorry, couldn't resist. Can anybody tell I hate the current tax system?

Does the term "Pie-in-the-Sky" mean anything to you?

mercphoto · February 2, 2006

Bodley wrote:

Does the term "Pie-in-the-Sky" mean anything to you?

One can always dream. And pester your elected representatives.

The cost, inefficiency and ability to cheat the current tax code alone is reason to abolish it. The fact that this country started with the federal taxation of personal income being illegal and requiring a constitutional ammendment to change is another reason to abolish it. Think about running a business and not having to worry abou tax implications? Why make a business decision based on what might happen to taxes, rather than worry about what might happen to growth, sales, etc.? Why make personal investment decisions based on the tax implications, rather than on what is best for your investments?

The book is a worthwhile read if, for nothing else, its history of the Federal income tax and also an explanation of why there is no such thing as a business tax. Once you realize that individuals ultimately pay all taxes your attitude starts to change.

IRS question from non-professional

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