First, there is no point hiding that income because the IRS already knows about it. I also tell other photographers to declare all other income they earned from photography during the year, just to be safe. That includes print sales, photo shoot fees, and any other income earned with the camera.

Second, photographers have to decide how they want to treat  that income on the tax return – as a hobby income or a business income. I wrote more about this decision here. But essentially – it boils down to two things – (1) how serious are you about the photography? Are you serious enough that you’re trying to turn it into a profitable venture? (2) how afraid you are of the IRS audit? When Schedule C is filed together with form 1040, chances of an IRS audit down the road increase significantly. All tax returns can get audited, of course, and we have no idea exactly how IRS chooses the returns for audit. But those that have Schedule C get audited more often than those that don’t.

Finally, another point I wanted to bring up here is something that’s been in the news earlier this week. The new budget for 2012 that Pres. Obama just released this week has this as part of it -

President Obama’s fiscal 2012 budget doesn’t cut much of anything (see above), and certainly not the Internal Revenue Service. The White House is requesting that the most beloved of all government agencies get an additional 5,100 agents next year, no doubt to wring further tax revenue from Americans. The White House wants to give the IRS a 9.4% raise in fiscal 2012, to $13.28 billion. Reuters reports this would allow for a roughly 5% increase in agency manpower to 100,537, including $460 million more for tax enforcement than in 2010.

More audits and more tax reassessments for all us, as we try to help the government balance its budget. Keep that all in mind as you are thinking about what to do with that money you might have earned through your photography.

I’m glad to say I filed my taxes last weekend. It took me several days to put everything together, but it’s good to be done and start worrying about another year. As a reminder, here are couple of articles I wrote last year that may help you with your taxes for 2009 and maybe even 2010 if you plan ahead. I updated those articles recently, and I hope you find them useful. Again, feel free to leave a comment to these articles if you have a tax question, of send me an email and I’ll be happy to help.

Tax Tips for Part-Time Photographers

Sales Tax Tips For Photographers in California