If you have recently started your own nature or wildlife photography business, you probably have a lot of questions about filing your taxes. You may already know that you can deduct business expenses, like the cost of your camera and equipment, but what you may not know is there are a host of other business expenses you can claim that you may not have thought of. Consider these often overlooked tax deductions when you file your taxes.
Is your photography a hobby or a business?
Whether the IRS considers your photography efforts a hobby or a business affects the amount of deductions you can claim on your taxes. According to the IRS, a business is defined as an activity carried on for profit. It further assumes the activity is a for-profit activity if you have made a profit in at least three of the last five years. In other words, if you never show a profit from your photography business because your deductions outweigh your earnings, the activity is considered a hobby and not a business. When it comes to taxes, you can deduct expenses for a hobby, but the deductions cannot exceed the revenue you gained from the activity. If you are classified as a business, you can claim more expenses than your revenue from your photography business, and the deductions will be applied to your earnings from your regular job.
What determines whether something is a legitimate business expense?
The IRS is the ultimate authority when it comes to determining whether your expenditure can legally be claimed as a business expense. According to the IRS, a business expense must be "ordinary and necessary" in order for you to deduct it on your taxes. "Ordinary" means the expense must be common for people in your field of business, and "necessary" means the expense must be helpful and appropriate for your field. The expense does not need to be indispensable to your business.
How do you know whether something is common in your field?
There are some items common to all photographers, like cameras, lenses, flashes, and other photographic equipment, but wildlife or nature photography is a more specialized field and may require less common items. Typically, you can tell whether an expense is common to wildlife photographers by talking to other wildlife photographers, reading or watching videos about wildlife photography, and observing the recommended supplies and equipment in training or instructional videos.
What are some overlooked business expenses a wildlife or nature photographer may be able to claim?
It's no secret that in order to capture amazing images of wildlife, you either need to go to animals or bring them to you. Both entail some business expenses.
Backyard Props: If you take photos in your backyard that you use to sell prints or in advertising your business, the costs associated with capturing them may be deductible as a business expense. This includes physical props, backdrops, and backgrounds as well as less common items like birdhouses, bird feeders, bird seed, perches, and any other items you need to capture the images you specialize in. But beware. If the items are also used for your personal enjoyment, you can only deduct the percentage of the cost that relates to your business. For example, if you customarily feed birds in your backyard because your family enjoys watching them, you can't claim the full cost of the feeders and birdseed on your taxes.
Travel: If you need to travel to get photos of wildlife or nature, you may be able to deduct your travel costs. Typically, you can deduct for standard mileage and may be able to deduct for meals while you are working. You may even be able to deduct a portion of a family vacation to a remote area if you are also taking photos for business purposes. Fees to parks, wildlife reserves, zoos, and other facilities where you will be taking photos for your business can also be deducted on your taxes.
Education: The costs of any conferences, workshops, and training sessions you attend to further your photography skills can be deducted as educational expenses. This includes the cost of books, magazines, and videos that are used for your professional development.
Talk to a company such as Wiggins, Smit, Burby, Reineke, & Company P.A. before deducting unusual business expenses or if you are unsure whether you can legally deduct the expenses.