Taxes and contract work

[Wendyp]

Hey guys and girls,

I am making some income with my photography now, but I also make money shooting for other photographers and even doing a bit on computer work every so often. When I work for the other photographer I consider it as a contractor, much like when I taught music lessons for the school district. I'm not their employee, but I am doing work for them. Do I need to invoice them? Or have a written letter of agreement? Should they file a 1099 on me? Or (and this would be a really stupid tax law if it turns out to be the case) would the govt. consider my contract work really me selling a service (photography and the images I capture, digital enhancements on photographs) and expect me to charge my friends sales tax on the work I do for them?

[PeteQ]

This is really a CPA question, but if you are considered a sub-contractor the person (contractor) hiring you is required to send you a 1099 if payments to you exceed $600 per year (I believe). You will then be taxed at your income tax rate as this will be considered normal income with no taxes withheld. Be sure to set aside some of this money as they government will expect their cut come April.

You don't need to invoice them (but you should to help you keep things straight) but you will need to keep track of this income so at tax time you can make sure you report it correctly.

If you do work for another photographer (re-touching shall we say) and they sell the image, they are required to collect the tax and you are their sub. If you sell the image to the customer, then you collect the tax. That's the basics, but that's why I have a CPA. Look around for one that will work with you. They are worth their weight in gold when it comes to keeping you out of trouble and they more than pay for themselves in the end (if you get a good one).

[CaptainTom]

Pete is correct as usual.
I would add that it is very very important to log all of your expenses. Not just the obvious camera equipment purchases, but anything that you use to conduct your new business.
Don't forget to log your mileage for business use of your car.
Running a photography business can take a lot of effort outside of the shooting part.
You will quickly learn what you can and can't "get away" with.
So, can I deduct the time it took to give you this advice ? No. But, I can deduct the use of my computer, the internet connection, part of my house, etc. because I use it "exclusively" to conduct my business.

[adirty1]

they have up too 600 dollars before they need to file a 1099 on you.
if you do more than 600 dollars of work for some one than you should have them file a 1099. coming from my cpa after asking about the MUA

[EastTxCPA]

The answers above are close enough. Regarding sales tax... in most cases it is the end user who pays the sales tax. So if you are providing work on a contract basis for another photographer, he will charge the sales tax on the entire job to the customer. It is kind of like buying inventory to resale. Only the final purchaser pays sales tax. However, sales tax issues can get complicated. The best way to be sure is to call the sales tax office (1-800-252-5555) and tell them your situation. They wll tell you whether you should collect sales tax.

[gpbusa316]

A lot of the general information can be found on the IRS website here:
http://www.irs.gov/businesses/small/index.html

This page is specifically related to self-employed and/or independent contractors:
http://www.irs.gov/businesses/small/...115043,00.html

And although people have mentioned the 1099 requirements for income tax purposes... you should also remember that if you have more than $400 net earnings as a self-employed individual or independent contractor, then you are responsible for paying the "self employment tax" as well. This is the Social Security Tax due on those earnings, which is 15.3%.

[CaptainTom]

Originally Posted by gpbusa316

A lot of the general information can be found on the IRS website here:
http://www.irs.gov/businesses/small/index.html

This page is specifically related to self-employed and/or independent contractors:
http://www.irs.gov/businesses/small/...115043,00.html

And although people have mentioned the 1099 requirements for income tax purposes... you should also remember that if you have more than $400 net earnings as a self-employed individual or independent contractor, then you are responsible for paying the "self employment tax" as well. This is the Social Security Tax due on those earnings, which is 15.3%.

All of this makes up part of your cost of doing business. When people ask why an 8X10 of their little monster costs $50, I would live to give them the list of people I have to pay in order to keep my business going.