Tax Deductions for Photographers
Anyone that operates their own business asks the same question throughout the year: “Can I legitimately write this off?” The answer to this question is a resounding “IT DEPENDS!” Now doesn’t that make you feel better and more confident? Here are some items to consider writing off and what you will need to substantiate them. As always, please consult with your CPA/Tax Attorney to determine if any of these items are right for you:
Home Office and Studio Expenses
Wait, so you use your living room as a studio? All you need to do is push the couch aside and there is plenty of room for a family of 4 (and their dog) to say “cheese!” Sorry, but that’s not a write-off. If you are going to claim a “home office” deduction on your tax return, that area needs to be dedicated 100% to your work and cannot be used for anything else. It also can’t be where you eat dinner, the kiddos can’t use it as a homework room and it most certainly can’t be your husband’s “man cave.”
If you do have a dedicated space in your home for your photography business, factor in the square footage (as a percent of the total home) and use that percentage to calculate your write-off for your mortgage payment, property taxes, insurance, repairs, utilities, etc. Just be ready… a home office deduction is one of the primary “red flags” that the IRS will audit. And yes, they can schedule a visit to your home to see it.
If you own or rent a standalone photography studio you can, of course, write off your rent, phone, electricity, internet, insurance, etc. entirely.
Meals and Entertainment
If you are taking a client out to dinner to go through your last session, the meal may be deductible. Keep in mind, though, that only 50% of what you charge is actually a write-off on your taxes. Keep your receipts too! ANYTHING that gets labeled as a tax-deductible expense needs documentation including receipt, names of people in attendance and the business purpose of the meeting. I would probably advise against taking the family to Disney World and saying “but my spouse and I talked about my business when we were down there!” Um, don’t be surprised but that won’t fly with the IRS.
Driving to and from photoshoots can put a ton of mileage on your car. Fortunately, you can usually get a tax break for this and can go a long way towards lowering your taxable income and taxes. Just keep a record of your business miles for the year and then multiply that number by the IRS mileage deduction rates (for 2018, the mileage rate is 54.5 cents). For example, if you drive 5,000 business miles in 2018, your mileage deduction would be $2,725.
If you travel by air, train or bus to photoshoots, photography conventions or workshops - you can write the cost of these tickets off too!
Equipment and Supplies
When you start a photography business, the upfront costs can be quite high. You can write-off your camera equipment, lenses, lights, software (including photoshop actions & lightroom presets), business cards, camera bags, memory cards, business coaching, photography classes etc. The important thing, again, is to keep your receipts. If you are continually investing into your business, don’t let all of the expensive items you spend your hard-earning money on not benefit you come tax day. That Mercedes you bought to lug all your equipment around? Probably not a write-off… but you can deduct the miles you drove as I mentioned above!
I think the recurring theme to all of these points is to be reasonable. People that file a Schedule C (Profit or Loss from a Business) on their personal tax return are always more likely to be audited. You need to be able to justify every deduction you take. My personal opinion is to stay conservative and not throw up any warning signs to the IRS. Most importantly, stay organized throughout the year. Don’t wait for April 14th to get all of your receipts together. Purchase a software tool so that tax season is a breeze! Think about it… as the flowers start blooming and the weather is warming up, do you want to worry more about your taxes or booking your first sessions of the Spring! Good luck… may this be your most profitable year yet!
Pat Green is a finance executive for a publicly traded technology company in the Chicago-area. He holds a BS in Accountancy from Northern Illinois University, an MBA in Finance from DePaul University and is also a Certified Public Accountant. More importantly, he is the husband of a wonderfully gifted and talented photographer (and wife), Kathy Green of RCG Photography, and father to 3 smart, energetic and active boys (Ryan, Colin and Gavin) whose first initials comprise the name of Kathy’s business.