A Photographer's Tax Return

I normally don't go into this much detail answering a question that comes in from my blog, but the complexity of this photographer's situation and her plea for help pushed me to do so.

Here's the question from Gwyneth in North Carolina:


Oh man. I lived in 2 states last year, and I think I have about 4 or 5 W-2s. Additionally, I did independent contractor photography work for another photographer. I was paid in both check and once in equipment. She has not given me a 1099 form. I have definitely spent far more on equipment and start-up costs than I made.

*** Do I file two different forms to the IRS?
*** My camera was purchased before I ever used it to earn money with...can I still deduct that?
*** Can I spread out my start-up costs? (website, cameras, computer equipment, etc, etc.) Or would they all be deducted for the year the money was actually spent?
*** What about cell phones? My cell phone is my only phone, so of course I use it for business AND personal calls. (this goes for my computer, clothing I bought expressly to wear while working, but that I also wear other times, etc.)

In the end, I definitely didn't make any money w/ my freelance work. I know I still need to file, and I want to do it right, but I certainly cannot pay a well-qualified tax preparer...I don't even have any of the money I made anymore. I poured it all back into equipment...and then some.

I apologize for asking so many questions. I'm sure you've answered a lot of them in various articles. I've read tons of your posts, and I find them so helpful.

Thank you!
Gwyn



Hello Gwyn,

Good Golly! You cannot file your own return. Because of the complexity of your situation I can tell by your questions that you don't know enough to do it on your own and do it correctly.

This is what I think you need to do. There are two major parts to the whole tax preparation event. The first part is the task of putting everything together properly, aka, recordkeeping. The other part is the tax preparation itself. Your part will be to get it the information together in an orderly fashion. That will take a bunch of your time and effort and patience.

Then take your records to a tax preparation franchise. Someone there will do a much better job than you can, and although they are not cheap the fee won't be in the thousands of dollars.

Here's two reasons to relax and just look at this as a chore that must be done:
Since you have more expenses than income you'll likely owe no tax.
And, you have a lot of time to do this. You need to file an extension. Read Extensions: Relax ... there's no need to file by April 15th on my website at http://www.junewalkeronline.com/index.asp?sPG=43 . An extension will give you until October 15, 2007 to file your return

To answer your specific questions:
1. You file one IRS 1040 tax return but there are many forms that are part of it.
2. You must separate both income and expenses into two areas: W-2 and self-employed.
[The equipment you were paid with is both income and expense.]
3. Your camera can be business expense. Its cost is its value on your first day of business.
4, Depending on the cost and kind of start-up costs they may be deducted all at once or over a period of time.
[The tax preparer will know how to handle that.]
5. You may deduct a business portion of cell phone and computer.
6. Street clothes are not deductible.
7. All the above will need to be divided by the number of days you lived in each state.

I cannot explain a recordkeeping system in an email or post. In the Most Simple System section of my book, Self-employed Tax Solutions, you can learn how to put your records together, simply and easily. The book costs about $13 on Amazon. If you choose, you could certainly read it and put your records together in time for the October deadline. You'd learn a lot and save yourself a lot of stress and time and money!

All this should put you on the right track.

Best regards,
June Walker