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Julian Block’s Tax Tips for Stock Photographers (Part 2)

June 8, 2009

Julian Block’s Tax Tips for Stock Photographers (Part 2)

PhotoEdit is proud to be working with Julian Block, an attorney and leading expert on taxes from Larchmont, New York, on a series of articles about tax tips for stock photographers. We are grateful to Julian for his time and his expertise. In part two of this series, he delves further into Internet taxation and depreciation as they apply to stock photographers.

Q: Is there a federal sales tax on the images I sell through the Internet?

A: There is no federal sales tax and has never been, as of this writing. 41 states, however, have a state sales tax law. If you sell one of your images to someone who lives in your own state, and if your state has a sales tax law (you’ll know if you’ve been paying sales tax at a retailer), then you’ll be required to charge a sales tax to your client. If your customer does not live in your state, you are not required to charge them a sales tax, unless you happen to have an office (it’s called “nexus” or “presence”) in your customer’s own state. Information about how to apply for a state sales tax license is available through your state’s department of taxation.

White young man sends his tax return document after dialing fax number on fax machine on table

Q: If I’m just renting my stock photos (not actually selling them) to a client in my own state for publication, am I required to charge a sales tax?

A: Each state interprets this situation differently. It’s best to check with the Department of Taxation in the state where you live.

Q: I heard they are extending an Internet ban on nationwide Internet taxes. Will this affect my stock photo sales?

A: At present, there is no taxing structure for e-commerce sales per se. A 1992 Supreme Court decision blocks states from collecting taxes from catalog, telephone or online sales unless the retailer has a physical presence in the state. Many state governments want authority to collect taxes on Internet online sales similiar to those they collect from retail stores. The states are concerned that rising e-commerce will erode their tax base that pays for schools and emergency services. But Internet retailers say it is too difficult to set up collections for 7,000 taxing districts. So for now there is a ban on states trying to collect taxes on Internet sales. This may change. The Internet Non-Discrimination Act also bans Internet access taxes and other multiple and discriminatory online taxes. To keep up-to-date on this subject, use a search engine such as Google.

Hispanic man fills out income tax form

Q: The stock photos that I take seem to have a shelf life of about five years. After that they have gone out of style and are outdated. If I take about 2,000 pictures every year, can I depreciate images that are older than five years?

A: The only business that I know of that can depreciate the intangible worth of its commodity is Major League Baseball. Owners get to write off a large portion of their player costs as depreciation. It’s a special perk reserved for the sports world. Depreciating creative content such as photos might not get the blessings of the IRS. You would have to be able to prove that all of your photos are worthless after five years. To the contrary, we all know that some photos appreciate in value after many years, sometimes for their historical significance and others for their fine art value.

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This concludes the second article in the Tax Tips for Stock Photographers series. Stay tuned next time when Julian will examine the sale of a home partly used a business office (in this case, a photo studio). Julian Block, an attorney in Larchmont, New York, has been cited as a “leading tax professional” (New York Times), “an accomplished writer on taxes” (Wall Street Journal), and “an authority on tax planning” (Financial Planning Magazine). The information in the above article is excerpted from 2009 Tax Tips Guide for Stock Photographers. For more of Julian’s articles and to order his books, please visit julianblocktaxexpert.com. Copyright 2009 Julian Block. All rights reserved.

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