Photographer Tax Prep: 7 Easy Steps to Get Ready for Tax Season
Nadine, a wedding and family photographer, had an amazing year in business. In fact, this was her best year ever. She captured iconic photographs that show the love and joy of families, and worked more weddings than any other year. With her success, Nadine finally crossed the six-figure mark — something she never imagined possible when she first set out on her journey as a mom-tographer photographing her own kids in her living room.
However, with the dreaded arrival of tax season, suddenly all that money felt like it meant nothing. She knew it wasn’t true, but between filing paperwork and trying to figure out which deductions were available to a photographer like her, she just couldn’t help but feel overwhelmed by the whole situation.
The Photographer Tax Headache
Nadine’s experience with photography business taxes is pretty typical of creatives.
Every January, it’s the same story.
The same anxiety.
The same adrenaline rush of fear and panic.
The same mad dash to prepare a slew of documents.
The same frustration at the amount “owed” to Uncle Sam.
If you have employees, there are 1099s, and W-2 tax forms. You’ve also got your quarterly returns and state tax deadlines. If you feel like it’s complex and overwhelming, you’re right, especially if you haven’t looked at the numbers all year.
And that’s just January. There’s still the big, looming, monstrous deadline coming up in April (but not before other important first-quarter milestones).
It’s all admittedly a recipe for stress, anxiety, and frustration.
7 Steps for Preparing Taxes as a Photographer
Getting through the tax season requires a bit of intentional preparation. But it is possible to confidently get through it with your sanity intact.
Here are some basic tips to prepare for tax season as a photographer.
TAX PREP STEP #1
Know Tax Deadlines
The first step to getting ready for tax season is to know the deadlines. For most businesses, the tax filing deadline is April 15th. However, there are some exceptions:
- If you are an S corporation, or need to file a partnership return, you only have until March 15th to file your taxes for the previous year, or you’ll face steep penalties.
- If you are a sole proprietor or have an LLC, or are a member of a partnership, you are expected to pay your tax debt by April 15th, even if you file an extension.
- If you filed an extension, you have until October 15th to file your taxes electronically.
While this isn’t a complete list, it’s a solid starting point for most photography studios.
TAX PREP STEP#2
Gather Your Documents for Write-Offs and Deductions
Once you know the deadlines, you’ll want to gather your documents so you can accurately navigate tax deductions for photographers.
You’ll need things like:
- Income statements
- A list of your expenses
- Bank statements
Your income statement is a document that lists all payments that you have collected. You’ll want to cross-check this number with the deposits in your bank account, your payment processing system, your CRM, and your ShootProof studio account.
Knowing and having proof of (AKA receipts) your photography business expenses are crucial to an accurate tax return. The IRS says that any and ALL expenses that are “necessary and ordinary” can be used to offset income and in the calculation of your profit or loss.
What this means is you can write-off or deduct photography expenses from your total income, so the amount of income you’re paying taxes on (AKA your payment) is lower.
Some common photography expenses eligible for deduction include the cost of new gear equipment, props, studio rental, your ShootProof subscription, what you pay your second shooter, the gas used to drive to photoshoots, etc.
There are other photography business tax write-offs you can and should discuss with your tax preparer, especially, if you qualify for the mileage deduction or the home office deduction.
TAX PREP STEP #3
Choose a Filing Method
There are two options for how to pay taxes as a photographer: electronically or by paper.
Filing electronically is generally quicker and easier, and it also allows you to track the status of your return. Paper filing, on the other hand, is typically slower and more complicated, and you can only track your paper return AFTER it has been processed. Before that, the only tracking available to you is with your postage carrier, so be sure to send your return with tracking.
While you receive an almost immediate response for your e-filed return, it can take up to a year or more for your paper return, with all its business complications, to be processed. Electronic filing also gives you easy access to paying your tax bill or receiving your refund. Nevertheless, paper filing may be required in some cases.
TAX PREP STEP #4
Understand Your Tax Obligations
As a business owner, you are responsible for paying various types of taxes, including income taxes, self-employment taxes, and payroll taxes. It’s important to understand which taxes you are responsible for so that you can accurately file your return and make any necessary payments.
Don’t forget about your state taxes either, which may or may not follow federal deadlines.
TAX PREP STEP #5
Hire a Professional
If all of this just makes your head swim, then hire a professional CPA or tax preparer to file your return. I also recommend using a bookkeeping service for photographers to keep your finances in order throughout the year. This is the trick to better managing your finances and having peace-of-mind around and financial clarity all year long.
If you need significant support, consider hiring a fractional CFO or a Business Financial Coach.
TAX PREP STEP #6
Pay Your Taxes
Once you know how much you owe, you need to pay your taxes on-time, either online, by mail, or in person at a local IRS office. Doing so can help you avoid costly penalties and save money in the long run. Regardless of how you pay, make sure all documents are properly filled out and filed before deadlines..
Ideally, your business will calculate profits and submit quarterly tax payments. However, if you find yourself owing, the IRS allows you to create payment plans.
If you have missed deadlines to file or pay your taxes, know that the IRS won’t call or text you EVER — only scammers will. The IRS does two things (among others) very well – write letters, and garnish bank accounts. If you ignore your tax debt, or avoid filing an accurate return, the IRS will contact and implore you by mail. If you ignore their efforts at collecting, then they have the potential to seize your assets, including your bank account, without warning.
TAX PREP STEP #7
Remember to Keep Calm
When preparing and filing your taxes as a photographer, try to maintain your perspective.
Take a deep breath.
Get a hold of your photography business finances.
Face the monster.
And file those taxes.
And know that, if taxes, write-offs, and deductions are still making your head spin, you’re not alone, and things can get better.
Photographer Tax Prep Is the Key
With the right tax preparation — and the right tax professional — filing your taxes as a photographer can become much easier and less daunting.
The goal is to have our businesses tax-ready all throughout the year, so that tax time is a calm, productive event.
You can do that by tracking your expenses, keeping receipts, and staying organized throughout the year, as well as by investing in tax software, hiring an accountant who can help you take advantage of tax deductions and credits, and dealing with taxes early on.
Written by PRUDENCE RUFUS | Photographs by Victoria Neill Photography via TwoBrightLights