Categorizing your photography business tax deductions- CHEAT SHEET!!
Updated: Nov 17, 2020
It’s Almost Tax Season!
Here’s a cheat sheet of some typical expenses you can write off as a photographer and how I recommend you categorize the transactions in your bookkeeping program to align with the IRS Schedule C. This will make it so easy to just plug in those numbers into your tax prep software (or give to your tax professional) to file your taxes quickly & easily!
Exp: Advertising Advertising (Line 8)
Website/blog hosting & design, domain name registration, business cards, logo design, promotional materials, catalogs, brochures, email marketing subscription (Convertkit, Mailchimp, etc.), SEO analysis, marketing, Facebook/Instagram/Google ads, screen printing or embroidering your logo onto items, etc.
Exp: Travel – Lodging Business Travel / Travel (Line 24a)
Hotel, motel, AirBnB, VRBO, etc. costs while traveling out of town for business, plus any internet access fees, etc. while you’re away.
Exp: Travel – Transportation Business Travel / Travel (Line 24a)
Bus, train, or airline tickets (+ any luggage fees) for traveling out of town for business, plus rental car expenses, taxi or Uber rides, etc.
Exp: Meals – Travel Meals / Meals and Entertainment (Line 24b)
Meals purchased while traveling for business out of town. (50% of the amount is deductible. Record the full amount of the transaction – your bookkeeping program should automatically do the math for you.)
Exp: Meals – Clients/Colleagues Meals / Meals and Entertainment (Line 24b)
Cost of hosting meals for potential clients, meals during meetings or outings with business colleagues (networking meetings, trips, etc.). (50% of the amount is deductible. Record the full amount of the transaction – your bookkeeping program should automatically do the math for you.)
NOTE: Meals cannot be what the IRS considers “lavish or extravagant.”
Exp: Affiliate & Referral Commissions and Fees (Line 10)
Affiliate payments you made, referral fees you paid, etc.
Exp: Communication Communication / Utilities (Line 25)
Expenses from a separate phone line for your business or a percentage of your cell phone bill based upon the percentage of time you use your phone for business vs. personal use (typically ~50%).
Exp: Second Shooters Contractor Labor (Line 11)
Second shooters, assistants, VA’s, and other independent contractors.
I like to make a different category in my bookkeeping program for each second shooter/independent contractor I hire. This makes it easier to see who has or hasn’t earned $600+ to determine who I need to send a 1099-Misc Form.
Exp: Equipment Depreciation (Line 13)
Cameras, lenses, camera bags, computers, laptops, printers, office furniture, etc. that will be used for more than one year.
If it costs under $2500, the entire amount is deductible the current year. If greater than $2500, the deduction is spread out over the life of the equipment (i.e. depreciated). Your bookkeeping program should do the math for you.
Exp: Insurance Insurance (Line 15)
Liability insurance, equipment insurance, etc. (not medical insurance)
Exp: Interest Interest (Line 16)
Interest on business credit cards, business loans, etc.
Exp: Legal & Professional Legal and Professional Services (Line 17)
Accounting/tax preparer or bookkeeping fees, business legal fees, consulting fees, professional association or membership dues, etc.
Exp: Office Office Expenses (Line 18)
If you have a business-only office: Office décor, services for the office (deliveries, security system, etc.)
Exp: Rental – Equipment Rental Expenses / Rent or Lease (Line 20a)
Renting cameras, lenses, equipment, small machinery, tools, etc.
Exp: Rental – Space Rental Expenses / Rent or Lease (Line 20b)
Renting out a studio for a shoot, renting a co-working space, renting a space for business storage, etc.
Exp: Repairs & Maintenance Repairs and Maintenance (Line 21)
Camera/lens/equipment repair or cleaning, computer repair or servicing, hard drive or data recovery, etc.
Exp: Supplies Supplies (Line 22)
Incidental items you’d typically find in a supply closet that are used up in approximately 1 year and cost less than $200: Pens, pencils, paper, ink, notebooks, planners, calendars, post its, flash drives, hard drives, labels, stamps, boxes, mailers, envelopes, packaging materials, staples, paperclips, scissors, tape, etc.
Exp: Taxes & Licenses Taxes and Licenses (Line 23)
LLC/corporation filing fees, renewal fees/annual fees, permits, certifications, copyright/trademark applications, professional licenses, payroll taxes, etc.
Exp: Utilities Utilities (Line 25)
Only if you have a separate, business-only office: gas, electric, water, etc.
If you use a portion of your home as your home office, do not enter any of those expenses here – there is a separate section of the tax return for calculating home office deductions
Exp: Other – Education Other Expenses (Line 27)
Workshops, conferences, online courses, retreats, masterminds, business coaches, educational books/magazines/audio books, etc.
Exp: Other – Online Other Expenses (Line 27)
Subscriptions to apps/programs/software (Honeybook, Adobe Creative Suite, Planoly, Tailwind, Dropbox, etc.). Music licensing fees: MusicBed, Soundstripe, SongFreedom, etc. Stock photography, digital downloads, etc.
Exp: Other – Gifts Other Expenses (Line 27)
Client gifts (champagne, candles, gift cards, etc). Limit: you’re only allowed to deduct $25 worth of gifts per person (i.e. recipient).
Exp: Other – Fees Other Expenses (Line 27)
Bank fees, business credit card fees, Etsy listing fees, photo permits or fees to shoot at certain venues/parks, etc.
Instead of tracking vehicle expenses (gas, repairs, maintenance, etc.) and getting a deduction for the percentage of business use of the car, I prefer to track every mile I drive for my business and take the Standard Mileage Deduction, plus parking & tolls paid during business drives, plus any expenses paid for local public transportation. The IRS sets a mileage rate each year ($.545 per mile in 2018), which typically ends up being a better deduction for me.
Transp: Mileage Car and Truck (Line 9)
Ex: Driving to weddings, shoots, meetings, etc., running business errands, picking up supplies, dropping off products/gifts, driving to workshops/conferences, etc. (Round trip!)
Note: You cannot deduct your commute (i.e. the drive between your home and office/co-working space/primary place of business).
While it’s best that you track your miles daily, it’s fine to update your logs weekly (what the IRS considers “contemporaneous”). Transp: Parking Car and Truck (Line 9)
Parking lot fees, parking meters, parking garages, valet parking, parking passes, etc paid for business drives. (Does not include payment of any parking tickets you may have received.)
Transp: Tolls Car and Truck (Line 9)
Tolls paid during business driving.
Transp: Local Car and Truck (Line 9)
Local public transportation expenses (ex: bus, train, Uber, Lyft, or taxi expenses).
HOME OFFICE EXPENSE:
On Form 8829, you’ll be able to write off some home-related expenses for the portion of your home that you used regularly and exclusively for your business. The IRS is pretty strict about this deduction, so make sure you meet the requirements. You must either:
regularly use this part of your home exclusively for your business
use this part of your home as your principal place of business
meet patients, clients, or customers at home
have a separate structure on your property exclusively for business purposes
or use part of your home to store inventory or product samples