Are you among the 56.7 million freelancers in the United States?
It’s no wonder so many people are drawn to the freelancer lifestyle. You get to work when you want, where you want, and you get to meet some amazing people along the way.
One thing that’s not so amazing? Taxes.
Are there any specific tax deductions for photographers or other freelancers? How do you know how much you owe and how to pay it?
In this post, we’ll provide a concise overview of freelance taxes for photographers. Read on to learn everything you need to know about paying taxes for your photography business.
Freelance Tax 101
Let’s start with the basic (and unavoidable) freelance tax.
When you earn more than $400 in any given year, you’re responsible for paying the government’s self-employment tax. This is a fixed rate of 15.3% and covers your Social Security and Medicare taxes.
Does that mean you’ll owe exactly 15.3% of your earnings every year? No. This self-employment tax is IN ADDITION TO your normal income tax rate, which varies by state and city.
A good rule of thumb is to set aside at least 25%-30% of your total earnings for the tax year. Keep these funds in a separate account–and don’t touch it–to ensure you have what you need when you file.
It’s a good idea to make quarterly payments (4 times a year) on your estimated taxes. In some cases, you may be required to do so. If you pay in more than you actually owe, you’ll receive a refund on next year’s return.
Which Tax Form Do I Use?
Any client who pays you over $600 should send you a 1099-MISC form at the end of the year. If you received payment through PayPal or a similar online service, you might get a 1099-K instead.
Of course, not everyone will make it easy and send these forms to you. That’s why it’s vital to keep track of all your own income and expenses for the year.
The easiest way to do this is with a Schedule C or Schedule C-EZ form. You can also create your pay stub at ThePayStubs to help you stay organized.
Tax Deductions for Photographers
Becoming a freelance photographer requires considerable upfront costs. Maintaining your equipment and a photography studio (or traveling to a client’s location) also adds up.
The good news is that there are plenty of great tax deductions for photographers.
When you’re first starting out, you can deduct your startup costs as “capital expenses.” You can also deduct the cost of any related photography classes or licensing fees.
If you rent a studio (or work from a home office), you can deduct all of those expenses, too. The same goes for travel-related expenses for both work and training.
Final Thoughts on Freelance Taxes
Being your own boss means paying your own taxes, but it doesn’t have to be an overwhelming process.
The next time tax season rolls around, refer back to this handy article about freelance taxes. That way, you’ll make sure you pay only what you owe and keep more cash in your pocket.
Did you find this article helpful? Check out our other photography-related posts for more great information.