When I started with DT, it was beyond my imagination that I will sell even a fraction of what I have sold so far. This tax filing year is the first time I was 1099’d, hence required to include my DT earnings to our income tax reporting. Perhaps it’s an untheorized reflex that when there’s a new income that the IRS needs to know about, the initial response is that of a frown, as it might result to a potential up movement to the next bracket—exactly the reaction I received from my husband as he disappointedly showed me the Form 1099 that arrived in the mail that one bright February afternoon—he didn’t say it but it was written on his face, this ‘expensive’ hobby of mine has just become more expensive!
Then he met with our tax person. He told me they briefly spoke about this new addition to our bottom line. According to my husband he gave our Accountant a ballpark estimate of what my camera cost and how one of the rooms in our house is now being utilized as my studio.
So the preliminary tax report/estimate arrived for our review. As I was looking at the ballpark figure my husband gave our Accountant, I thought about all the items I use in my photography—the computer, back up storage, lighting equipment, flash units, books, miscellaneous accessories. I listed all of them and asked for a revision.
After factoring in the allowable depreciation of my camera equipment, computer and software; purchase of books, partial expense for internet bills, home office allowance for the studio space, even a very modest amount for mileage justified by those landscape images; that first ballpark figure we gave is just half of the actual cost of what we are allowed to declare!
As you might have guessed, it was a happy ending for both our Federal & State filing.
My husband was all smiles at the net effect of this new “expensive” hobby of mine. Of course I know that these deductions are short-lived but I am happy to pay my fair share of taxes on this passive income of mine. With or without DT I would still own my camera, my computer, my books, etc. I am thankful of that provision by the IRS to declare these as expenses, now that they generate some income for me!
And yes, I kept a printout of that preliminary estimate vs. final filing—it just might come handy for when I speak to my husband about that next lens purchase ☺!