Advance Notes: There's a tax deduction available to freelance photo researchers who use part of their home as an office.
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The IRS allows you deductions for the portion of your house that you use to operate your stock photo research business. However, if you are a salaried person working at a "main job," and your photo research business is a part-time venture, you cannot use your office-in-the-home expenses to create a net operating loss. If the total of your other photo-research-related business expenses (not including home-office expenses) is greater than your income, giving you a loss, that is allowable. If your office-in-the-home expenses, when added to the total of your other business expenses, take you over the top to give you a loss, that's not allowable. Only that portion of your home-office expense that takes your total of expenses up to the amount of your gross business income, can be deducted, each year (there is a loss-carry-forward provision). If the total of your home-office expenses added to the total of your other business expenses comes to less than your gross income, the full amount of your home-office expenses is deductible. (And of course all expenses are allowed if you are a full-time freelancer.)
SEPARATE EXPENSES
If you are in a salaried position and your photo research business is part-time, here's how it works for you. Let's say your photo research business, operated out of your home, has a gross income (receipts before expenses) of $12,000. Your business incurs home-office expenses of $1,500 (a percent of utilities, mortgage interest, roof repairs, and so on). Your normal business expenses, such as office supplies, postage, travel, software, computer expense, etc. total $11,500. Since your gross income was $12,000, you can use only $500 of your $1,500 office-in-the-home expenses as a deduction. However, you may carry forward the disallowed $1,000 to subsequent tax years; these carried-forward home-office expenses, though, are subject to the same restriction each subsequent year- i.e., they are not allowable if the addition of their total creates a net loss from the business activity.
The room(s) in your home where you conduct your business must be used exclusively and regularly for your photo research operations. The IRS won't approve the room as a deduction if it's also used as a sewing room or a part-time recreation room or if it's part of your living room. Measure the square footage of your home (don't include the garage unless it's heated or air-conditioned), and then measure the square footage of your working space. Divide the latter by the former, and you'll determine what portion of your home is used for "profit-making activity." For example, if your working area is a fourteen-by-eleven-foot room (used exclusively and regularly for your photo research business), and the total square footage of your home is 1,232 square feet, you are using one-eighth of your home for business.
"Business Use of Your Home" is the title of IRS Publication 587. It's a clear explanation of what you can and cannot deduct. Also check out Booklet 529, "Miscellaneous Deductions." Write; log on; or phone the IRS for a free copy at (800) TAX-FORM.
Rohn Engh, veteran stock photographer and publisher of "PhotoRESEARCHER Newsletter," has provided on-line targeted information for photobuyers, photo researchers and editors for two decades. No other newsletter brings photobuyers such up-to-the minute information on how to find stock photos. For more info: 800 223-3860.
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Advance Notes: In your photo researching operations, do you use your car for business reasons? ("Car" can mean an automobile, van, pickup, or panel truck.) Say, trips to see clients or customers, or to attend meetings, a seminar, or, of course, to review or purchase photos? If you do, you'll find the tax code allows you to use one of two methods to figure your tax deductions: actual expenses, or a standard mileage rate.
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When you use your car for business, if you decide to use the "actual-expense" approach, the list of deductible items includes gas, oil, tires, repairs, license tags, registration fees, insurance, garage rent, lease payments, parking fees, tolls, and depreciation. (Commuting to and from your place of work is not deductible.) The interest portion of car payments is not a deductible car expense if you are an employee, but it is deductible if you are self-employed.
Opting for the actual-expense method in the first year the car is used for business, requires you to stick with that method as long as you have that car. Moreover, there are restrictions on depreciation deductions for cars used less than 50 percent of the time for business driving. Another limitation applies to cars used for both business and personal driving. You have to divide total costs between the two purposes; the cap on your deductions is the percentage of costs attributable to business use.
When you use the standard mileage rate, this method encompasses depreciation, as well as insurance and other car expenses. The standard rate spares you the bother of tracking actual expenses; you only need records of business miles driven for the year. For tax year 2007, the standard rate is .425 cents a mile.
The IRS restricts use of the standard rate. If you don't use the rate in the first year, you are precluded from using it for that car in any year. But if you do use the rate in the first year, there is some leeway. In subsequent years you generally have the choice to use either the rate or actual expenses.
When you claim the mileage allowance, remember to take a separate deduction for parking fees, and bridge, tunnel, and turnpike tolls paid while you are on business. (Parking fees at your place of work are nondeductible commuting expenses.)
Reminder: Individuals may deduct up to $2,000 for a car that uses clean-burning fuel. (You can claim the deduction for a past year by filling an amended return.)
Figure your deduction both ways (actual expenses or mileage rate) to see which option provides a larger write-off for your particular situation. Usually actual expense is more advantageous than the mileage rate, particularly if your car is a gas-guzzler. But the reverse can be true for folks who have extremely low outlays or scant business mileage.
If the IRS audits your return and questions car expenses, they will not challenge a standard-rate deduction, provided you are able to substantiate the miles driven.
Keep a glove compartment diary where you list each business use, when, how far, and why you went, along with the cost of parking and tolls.
A final thought: I advise my clients to claim all car deductions to which they are legally entitled. In my experience, they should not let the possibility of IRS scrutiny cause them to put the brakes on breaks that can significantly lessen the amount siphoned off for taxes.
Julian Block, a former IRS agent and tax attorney, is the author of "Julian Block's Tax Avoidance Secrets," $33.95. (560 pages; mention you are a PhotoStockNotes subscriber and receive the book for $19.95), 3 Washington Sq, Station 5, Larchmont NY 10538-2032). Julian can be reached at julianblock@yahoo.com.
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Advance Notes: Offering time and expertise to help projects and programs that contribute to society has tangible rewards.
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I do pro bono work for organizations working with issues that are near and dear to me. Most recently I have been working with updating the photography for the Children's Advocacy Center in Lincoln, Nebraska.
In this Sidebar, I would like to challenge you to find something in your local area that you can volunteer your expertise and services for.
Volunteering is a genuine win-win activity. Besides being a good thing to do, it will get your name out there in your local community. People involved in volunteering on the local level are often worth getting to know. It might lead to work for you, too, since business owners and community leaders often are involved in local organizations. Even if it doesn't lead directly to buyer contracts, getting your name out there to the local community and business leaders is a good thing, and can really help you as your stock photography research business grows.
THEY NEED YOU
Photography is something almost all organizations need. Finding photos for communications with local donors, photos for a new brochure or fundraiser, are just a few examples where your expertise can make a big difference for a local non-profit.
Costs associated with volunteering are most often deductible on your taxes. Only actual costs, though. Keep a log of miles driven, plus any expenses, and discuss this with your accountant come tax-time.
Volunteering can be rather addictive. Once you start it can be difficult to stop, not that you should stop. It is OK to set limits for your volunteering. A limit is actually a good idea - it prevents you from burnout from doing too much of the good stuff.
You have a unique skill-set to offer local organizations. Volunteering your services doesn't have to cost you more than your time and a little depreciation on your equipmen
It is well worth it. Trust me on this.
Photojournalist Mikael Karlsson has 14 years' experience of working for magazines and newspapers in more than 30 countries. He moved to the United States in 1998 from his native Sweden. He lives in Nebraska and is currently US correspondent for 11 Swedish magazines and a regular contributor to a wide variety of U.S. publications. Reach him at mike@photosource.com.
Of
Interest
A Complete Handbook for Professionals
Photographing Jewish Weddings:
by Stan Turkel
a review by Joseph Stanski
I love weddings. Most of all, I love ethnic weddings. Mainly because, I get to participate
and be a part of, another culture; and Stan Turkel’s book on Jewish weddings does just that; takes you into another culture; the Jewish cultural wedding.
Stan Turkel leaves no stone unturned as to defining a Jewish weddings. He begins Chapter 1 - Types of Jewish Weddings by defining the three major denominations, Reform Judaism, Conservative (Masorti Judaism) and Orthodox Judaism. And than introduces us (the photographer), to proper protocol with interacting with family members.
In Chapter 2, Marketing For Jewish Weddings, the ability to market your image successfully is very important to an Orthodox and non-Orthodox family. “Your marketing strategy must take this into account, as separate marketing efforts are required for each.” Timing, Buying Influences, and Wedding Packages and Shooting Styles are all very important considerations with the proper marketing of a Jewish wedding.
OLD-TYME FLIX -- National Geographic snaps up BBC Photography series, “Genius of Photography”. Outright Distribution has sold BBC2 documentary series to National Geographic Channels International (NGCI) as part of a raft of other post-MipTV sales. Produced by Wall to Wall, the series offered a comprehensive history of photography and was originally produced for BBC2 and BBC4.
http://www.broadcastnow.co.uk/news/2009/05/nat_geo_snaps_up_bbc_photography_series.html
