If you have a photography or videography business--whether full-time or part-time--you need to know which expenses you may deduct from your taxes. Every deduction you take reduces your taxable income for the year, and thereby reduce your taxes. These deductions are quite valuable--for example, if you're in the 25% tax bracket, each $100 in deductions saves you $25 in income tax. It will also usually save you about $15 in self-employment taxes as well.
Professional photographers and videographers are usually independent contractors, not employees. A self-employed businessperson may deduct any expense that is:
- directly related to the business
- ordinary and necessary, and
- not lavish or extravagant under the circumstances.
Common deductions by photographers and videographers include:
Business Travel: Photographers and videographers often travel out of town, or even out of the country, on shoots. You may deduct all reasonable expenses you incur when doing so that are not reimbursed by your clients. These expenses include airfare or other transportation costs and hotel or other lodging expenses. But, you may only deduct 50% of the cost of meals when you travel for your business. If you plan things right, you can even mix pleasure and business and still get a deduction.
Local Travel Expenses: Local travel may include trips to local shoots, to video or photography classes, to galleries or film exhibitions, or to pick up supplies. You may deduct trips by car or public transportation. If you like recordkeeping, you can keep track of all your car expenses to figure your annual deduction. But, if you’d rather not keep track of how much you spend for gas, oil, repairs, car washes, and so forth, you can use the standard mileage rate. When you use the standard rate, you only need to keep track of how many miles you drive for business, not how much you spend on your car.
Film Crew Expenses: If you need to hire one or more people to serve as your film crew, you may deduct all your expenses. This includes salaries or fees, reimbursements for expenses, and meals.
Agent Fees: If you have an agent, you may deduct all the fees he or she charges.
Studio Expenses: If you have a photography or video studio in your home that you use exclusively for your business, you may be able to deduct the cost using the home office deduction. This deduction is particularly valuable if you are a renter because it enables you to deduct a portion of your monthly rent--a sizable expense that is ordinarily not deductible. The rent and utilities paid for an outside studio are fully deductible business expenses.
Gallery Rents: If you show your photos in galleries, gallery rents or membership costs are fully deductible.
Depreciation: When you buy property for your business that will last more than one year, you may deduct the cost a little at a time over a period of years. This process is called depreciation. Examples of depreciable property often used by photographers and videographers include camera and video equipment (including bags), lighting equipment, darkroom equipment, computers, and cell phones. Photography books also fall within this category. However, you don’t always have to depreciate such long-term business property. Small businesses have the option of deducting the entire cost of such property in a single year under Internal Revenue Code Section 179 or using bonus depreciation. This enables you to get a big deduction in a single year rather than spreading it out over several years.
Supplies: Supplies are items you purchase for your business that you use up in less than one year. Of course, these include all your photo or video supplies. They also include things like stationery and postage.
Other operating expenses. Other deductible operating expenses may include slide and film processing, modeling fees and props, studio rental, and equipment repairs.
Dues: Due you pay to belong to professional organizations or other organizations are deductible.
Education: Photography or video classes and lessons are deductible.
Promotional expenses: Virtually everything you spend money on to promote yourself as a photographer or videographer is deductible, including advertising and listings in publications, business cars, resumes, photos, brochures, videos, and websites (including Internet connection costs).
Subscriptions: You can deduct the cost of magazines, journals, newsletters, and other subscriptions useful for your business.
Legal and Professional Services: You can deduct fees that you pay to attorneys, accountants, consultants, and other professionals if the fees are paid for work related to your business.
Insurance: Self-employed people, including photographers and videographers, are also allowed to deduct 100% of their health insurance premiums from their income taxes. In addition, if you have a home office, you may deduct a portion of your homeowner's insurance.
Meals and Entertainment: The days of the deductible three-martini lunch are pretty much at an end. To deduct the cost of a meal in a restaurant or an entertainment event like baseball game or theater visit, you must have a serious business discussion before, during, or soon after the event. Moreover, you may only deduct 50% of your business meal and entertainment costs. Thus, for example, you can deduct 50% of the cost of a meal you have with a gallery owner to discuss displaying your work.
Home telephone expenses: You get no deduction for a single phone in your home; but you may deduct the cost of long distance phone calls and special phone services you use for business such as call waiting or message center. You may deduct the full cost of a second phone line you use at home for business, including a cell phone.