It’s the most dreaded time of year for photographers: tax season! One of the most vital parts to starting a photography business is making sure your finances are squared away, which means paying taxes. Whether you hire a professional accountant to do your taxes for you or take on the role for yourself, it’s important to have a basic understanding of how business taxes work. In this article, I’ll help you decode the complicated tax process so you can be well on your way to meeting that annual April deadline. Don’t worry–it’s not as terrible as it sounds!
How I Handle Taxes
I’ve been a full-time self-employed photographer since 2012 and have been responsible for handling my own federal and state taxes. During my first year of business, I tried to file my taxes on my own, but quickly found it to be too confusing. Thus, I turned to Google and looked for a pro.
Working with a Tax Preparer
I sought out a professional tax preparer to file my federal taxes on my behalf, and it is easily the best business decision I’ve ever made. He emails me once a year, generally around March with a list of items he needs from me. I respond back with all requested documents, and he prepares my taxes accordingly. He then sends me the finalized document for my review, and with my approval, he files my taxes electronically on my behalf. About a month later, he then follows up with a bill (I pay around $400 a year), and sends me a hard copy version of tax files to keep in my own records. He also goes the extra step to set up my quarterly tax payments and sends me electronic reminders to pay them on time.
This is how simple and straightforward it can be to work with a pro. Even if you intend on filing your own taxes, I highly recommend consulting with a financial professional first to make sure you’re good to go.
What a Tax Preparer DOESN’T Do
One thing to note: a tax preparer is someone you work with once a year in the spring just before taxes are due. Tax preparers are not bookkeepers, meaning they do not sort out your receipts, keep track of your expenses, send out invoices and collect payments, etc. All of that daily accounting work is up to you to handle. Or you can hire yourself a professional bookkeeper to do it for you. If you choose to do your own bookkeeping, I recommend using an online program such as FreshBooks. These programs can be automated (to an extent), and they allow your tax preparer electronic access so they can file your taxes for you.
Tax Preparing Guide for Photographers
If you make any income whatsoever from photography, you’re considered a professional and thus must pay appropriate taxes. Please note that I am not a financial professional this is meant to be a basic guide with advice only. Consult a professional with any specific questions. This guide also covers federal tax returns for photographers based in the United States only. Each U.S. state and country outside of the U.S. has their own tax procedure that you will need to reference on your own.
Federal Tax Forms
First, let’s talk about the various tax forms you’ll encounter and need to fill out. Note that all of the sample images included are just snippets of the full forms (they are much longer in reality!).
1040 Form
Also known as a 1040EZ/1040A, this is the basic table of contents for your tax return that professional photographer must fill out. This is where you input your gross income, deductions, and tax credits.
Schedule C
Everyone who claims income from a business will use a Schedule C as their basic tax form. Use this form to report any income made from photography, as well as any business expenses that you plan to deduct. Possible expenses/deductions could be insurance, equipment, advertising, studio space rent, etc. More on photography business expenses below.
Download a Schedule C form here.
Schedule SE
No matter your age and even if you’re already receiving social security or Medicare benefits, you must pay applicable taxes. The Schedule SE is used to calculate your share of social security and Medicare taxes based on your self employment net earnings. This form must accompany your Schedule C.
Download a Schedule SE form here.
Form 2106
This is the form that might take you the longest to fill out. Form 2106 is where you report business expenses that you intend to deduct from your taxes, specifically expenses relating to your business mileage. This is when it helps to have a mobile app like MileIQ to automatically track your mileage for you. Note that these expenses should go on a Schedule C if you’re self employed, or on the 2106 if you’re employed by another photographer or company who is issuing you a W2.
Download a Form 2106 here.
Form 8829
If you’re like me, you probably have a home office or even a home photo studio. If so, you’ll want to write off part of your rent or mortgage based on the square footage of your home office space. Calculate this number as a percentage by taking the square footage of your office and/or studio space and dividing it by the total square footage of your home.
Download a Form 8829 here.
Form 4562
Whenever you invest in a costly piece of equipment such as a camera body or lens, you’ll need to depreciate that equipment every year. Form 4562 is what you’ll use to determine your Depreciation and Amortization. Note that depreciation rates can differ greatly depending on the piece of equipment. Also, make sure that you do not claim the purchase of equipment as an expense while also claiming depreciation. The IRS considers this double-dipping and frowns upon it.
Download a Form 4562 here.
Photography Business Expenses
As mentioned above, the Schedule C form is usually where you input all of your business expenses, which are then deducted from your total annual income to determine your total taxable income. To learn more about what costs qualify as photography business expenses, check out this previous blog post.
Quarterly Tax Payments
If you’re a self employed photographer or business owner, it’s not uncommon to end up owing both state and federal taxes every year. I don’t think I’ve ever received a tax refund in the nearly five years I’ve been a business owner. It actually makes perfect sense since you’re no longer having taxes withheld from your paycheck like most other people are. However, this does mean that you need to be extra careful with your finances, especially in your first couple years of business.
My first year as a self employed photographer, I waited to find a tax preparer just a month before taxes were due. This meant that I hadn’t been paying my quarterly taxes all year, and I ended up owing a LOT of tax money that first year. It was a huge blow that I hadn’t planned for. As a result, I definitely think that tax payments are something that everyone should factor into the overall cost of starting a photography business. Ever since, my tax preparer has me set up to make quarterly tax payments. It’s a bit old school process. I have to write a physical check and send it along with a printed voucher to the IRS via snail mail (there’s no online payments). However, it makes my annual tax filing process much less painful.
Quarterly tax payments can be set up by filling out a Form 1040-ES. From then on, you’ll need to make sure payments are made to the IRS every quarter.
Quarterly Tax Payment Due Dates
*These exact due dates are approximate and may vary according to the year.
- Payment Period: January 1 – March 31; Due Date: April 15
- Payment Period: April 1 – May 31; Due Date: June 15
- Payment Period: June 1 – August 31; Due Date: September 15
- Payment Period: September 1 – December 31; Due Date: January 15 (of the following year)
Conclusion
If you’ve made it this far, congrats! You’ve completed a basic rundown of federal tax forms for self employed photographers in the United States. It isn’t too bad once you dig into it. But if you’re feeling completely overwhelmed, please inquire with a tax professional. It’s always better to be safe than sorry!
Questions? Feedback? Let me know in the comments below!
