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Writing off gear?
Carlo Coggi writes ...
Two months ago I sold my Canon 10D and bought a 30D and some related camera gear. If my photos and text are accepted for publication, can I then form a sole proprietorship or corporation and *retroactively* write-off the cost of my gear and trip? Assuming you're in the US you have two options once you rake in some bucks thru your photography ... one option is to declare the income as 'hobby income' and report it on (I think) line 21 of your 1040, then you can declare expenses *up to that amount* (but not over) if you itemize deductions. If you do not itemize deductions then you have to report as income the full amount. Google on 'hobby income photography' or similar for specifics. There's quite a bit of useful info on this on the web, including IRS publications. The other option is to declare a "business" for your photography, in which case you file a separate form listing all your income, expenses, depreciations etc. You can have a loss here and use it to off-set other earned income, BUT (gigantic but) you need to be able to demonstrate you are running this like a business and trying to make a profit, not using it as a tax write-off. If doing this option you should consult a tax attorney since using photography as a tax write-off is something the IRS lads look for and it could easily trigger an audit if you have several years of low income and high expenses leading to losses applied to other earned income. ... write-off the cost of my gear and trip? In both of these scenarios you can write off the costs of the trip if you sold an article about it (if hobby income, can only write off expenses up to the amount of income) but in neither of these scenarios could you write off any gear you sold earlier before you took the trip or decided you were a "business". If you make a lot from selling a story about the trip it's worth consulting an accountant but if it's under a few thousand dollars it's simpler to report it as hobby income unless you'll be doing this often. Bill (not a tax attorney so consult one before blindly following this advice, but I've researched this issue before ...) |
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