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04/14/2012 07:41:47 AM · #1 |
| Also, the tax rules might have changed in the last five and a half year since the original poster asked the question... |
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04/14/2012 07:15:27 AM · #2 |
If you bought any camera gear this year, you can sell the photo, thus earning an income from your hobby. You can donate the money back to the charity. Now you can claim you photography gear as a business expense.
Its also worth noting that going this way can flag you for an audit. You also need to itemize.
It may not even be worth it. Call a tax professional. |
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04/14/2012 05:48:59 AM · #3 |
Originally posted by cpanaioti:
And this was supposed to be an easy question. LOL |
...there are no easy questions when dealing with taxes.
Ray |
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04/14/2012 01:51:37 AM · #4 |
The Internal Revenue Service knows that working class individuals routinely inflate the value of
charitable contributions on their tax returns. As a result, the tax bureau examines these items particularly closely. It is important to evaluate gifts fairly and transparently if a taxpayer desires to claim the deductions and avoid an audit. The following suggestions may help. If you need to pay a tax fee, a personal loan can help.
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11/16/2006 02:13:33 PM · #5 |
| And this was supposed to be an easy question. LOL |
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11/16/2006 12:17:03 PM · #6 |
Originally posted by Gordon:
Originally posted by GeneralE:
This (full) post is probably the most sensible thing written about taxes in the last 78 years. Thank you. : ) |
Isn't there some sort of law against that ? |
She forgot to add the line about "This is just general advice for specific information see a tax laywer" :-)
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11/16/2006 11:36:34 AM · #7 |
Originally posted by GeneralE:
This (full) post is probably the most sensible thing written about taxes in the last 78 years. Thank you. : ) |
Isn't there some sort of law against that ?
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11/16/2006 11:32:15 AM · #8 |
Originally posted by robs:
14 cents per mile huh - I didn't do the maths, but can any car run on this with the cost of fuel in your area :-) At least for business use it's 40-something. |
irs mileage rates |
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11/16/2006 11:05:00 AM · #9 |
Originally posted by ClubJuggle:
Bob produces the photo and incurs actual expenses of $5. As a matter of principle, Bob does not give his photos away for free, but is happy to "trade checks" and donate his licensing fee back to the charity. He sends the photo off to the charity, along with a license to use the photo and an invoice for his licensing fee of $200. The charity pays the invoice, and Bob immediately cuts a check to the charity for a $200 donation, essentially donating back his licensing fee.
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I've been wondering about this. Assuming Bob is a talented amateur, and only makes a little money from photography. If Bob receives $200 for the photo and treats it as income, he can take a $200 deduction for any camera gear he has purchased. Can he also take a $200 deduction for the charitable contribution? Or does the IRS have rules to prevent this sort of "double dipping"?
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11/15/2006 10:51:11 PM · #10 |
Originally posted by ClubJuggle:
Originally posted by fotomann_forever:
Well, don't that just bite. |
Well, not really. Think of a hypothetical situation where Bob and Sue are each asked to produce a photograph for their favorite charity:
...
~Terry |
This (full) post is probably the most sensible thing written about taxes in the last 78 years. Thank you. : )
Message edited by author 2006-11-15 22:51:41. |
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11/15/2006 10:15:34 PM · #11 |
Originally posted by Spazmo99:
Financially, sure.
But since you sold a photo, that's gotta make you feel good.
Then, making the donation makes you feel even better. |
Good point :)
~Terry
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11/15/2006 09:22:20 PM · #12 |
Originally posted by ClubJuggle:
Originally posted by Spazmo99:
As Terry stated, it's actually better to do this:
Sell them the photo - That means billing them and getting paid by them
Take the money and write a donation for the same amount that was billed.
Now, come tax time, you can deduct, not only the cost to produce the image as a business expense and also deduct the check you wrote as a charitable contribution. |
Nope -- what I said is it's really a wash -- you end up the same either way.
~Terry |
Financially, sure.
But since you sold a photo, that's gotta make you feel good.
Then, making the donation makes you feel even better. |
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11/15/2006 09:14:56 PM · #13 |
Originally posted by Spazmo99:
As Terry stated, it's actually better to do this:
Sell them the photo - That means billing them and getting paid by them
Take the money and write a donation for the same amount that was billed.
Now, come tax time, you can deduct, not only the cost to produce the image as a business expense and also deduct the check you wrote as a charitable contribution. |
Nope -- what I said is it's really a wash -- you end up the same either way.
~Terry
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11/15/2006 09:13:50 PM · #14 |
As Terry stated, it's actually better to do this:
Sell them the photo - That means billing them and getting paid by them
Take the money and write a donation for the same amount that was billed.
Now, come tax time, you can deduct, not only the cost to produce the image as a business expense and also deduct the check you wrote as a charitable contribution. |
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11/15/2006 09:08:13 PM · #15 |
Originally posted by robs:
14 cents per mile huh - I didn't do the maths, but can any car run on this with the cost of fuel in your area :-) At least for business use it's 40-something. |
That rate is set by statute, where the other rates are determined by the IRS and indexed to an energy-weighted inflation index.
ETA: Mine can, but I drive a Prius. :)
~Terry
Message edited by author 2006-11-15 21:08:46.
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11/15/2006 09:05:53 PM · #16 |
Originally posted by fotomann_forever:
Well, don't that just bite. |
Well, not really. Think of a hypothetical situation where Bob and Sue are each asked to produce a photograph for their favorite charity:
Bob produces the photo and incurs actual expenses of $5. As a matter of principle, Bob does not give his photos away for free, but is happy to "trade checks" and donate his licensing fee back to the charity. He sends the photo off to the charity, along with a license to use the photo and an invoice for his licensing fee of $200. The charity pays the invoice, and Bob immediately cuts a check to the charity for a $200 donation, essentially donating back his licensing fee.
Sue produces a photo, and also incurs actual expenses of $5. She has no such concerns about giving her photo away for free, and sends the photo off to the charity, along with a license to use the photo. She provides the license free of charge.
In essence, Bob and Sue have both done the same thing -- they've each provided a photograph to the charity free of charge.
Now, let's look at what happens at tax time. To simplify this discussion, we'll assume that neither Bob nor Sue are subject to affected by the limitations on deductions for charitable donations.
Bob's situation is easy to understand. He'll need to report the $200 he received for the photograph as income, and can deduct the $5 cost of producing the photograph as a business expense. He can deduct the $200 donation he made as a charitable donation. The net effect of all this is to reduce Bob's taxable income by $5.
Sue's situation is what confuses many people. Many feel that she should be able to take a $200 deduction for the photo, representing its fair market value and/or the value of her time. If this were allowed, though, the effect would be to reduce Sue's taxable income by $200 -- meaning that she would be $195 ahead of Bob, even though she did the exact same thing. The correct tax treatment of Sue's situation, though, is to only allow deduction of the actual $5 expense as a charitable deduction, which reduces her taxable income by $5, just like Bob.
~Terry
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11/15/2006 08:56:15 PM · #17 |
| 14 cents per mile huh - I didn't do the maths, but can any car run on this with the cost of fuel in your area :-) At least for business use it's 40-something. |
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11/15/2006 08:48:30 PM · #18 |
Originally posted by JRalston:
Well, what if I emailed them the photo?
Then I could deduct the cost of internet, my computer, and the electricity to run the computer.
;o) |
Pro-rated, you could ... your computer is amortized (by the IRS) over a period of about 3 years (or 8,760 hours), so for a typical photo (allowing an exceedingly generous 2 hours to process and transmit your photo) you can deduct 1/4,380 of the cost of the computer ... or less than the cost of an 8x10 print. |
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11/15/2006 08:46:45 PM · #19 |
To make this clear and show why it is so (only deducting cost of materials), suppose:
1. The non-profit *buys* the photo from you. You would owe income tax on
the price they paid less your cost.
2. You turn around and donate what they paid back to the non-profit. This is a deductable contribution.
So the non-profit has the photo at no cost, and your tax deduction is greater than your taxable income on this deal by your cost.
Thus when you donate your work, you can only deduct the cost of the materials. |
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11/15/2006 08:46:04 PM · #20 |
Originally posted by Gordon:
Only the cost of transferred materials.
So if you donated a print to a charity auction, you can deduct the cost of printing.
If you give them a digital file on CD, you can deduct the cost of the CD. |
Also, if she produced the photo specifically for them, she could also deduct any actual (hard) costs associated with producing the photograph. This would include mileage at the rate for mileage driven in service of charitable organizations, which is set by statute at 14ยข/mile. This might also include the cost of admission to venues specifically for the purpose of creating the photograph, or, in most cases, materials purchased solely to produce the photograph.
~Terry
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11/15/2006 08:46:02 PM · #21 |
Originally posted by JRalston:
Originally posted by Gordon:
Only the cost of transferred materials.
So if you donated a print to a charity auction, you can deduct the cost of printing.
If you give them a digital file on CD, you can deduct the cost of the CD. |
Well, what if I emailed them the photo?
Then I could deduct the cost of internet, my computer, and the electricity to run the computer.
;o) |
You can, if you do that 100% of the time you use the computer - otherwise you'll have to work out what percentage of the total usage is for that purpose ;)
Same with business/personal use of equipment.
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11/15/2006 08:43:51 PM · #22 |
I agree with Terry on this also.
Print shops like where I work run into this kind of problem as well, when they are asked to "donate printing" for a non-profit -- they really can't, since they are already deducting the costs of production as business expenses ... no fair (to the rest of us) to deduct the same thing twice.
No, if someone were to buy one of your prints at a gallery for $10,000, and donate it to a qualified non-profit, they could (probably) take a major deduction for that, but you can't. : ( |
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11/15/2006 08:42:19 PM · #23 |
Originally posted by Gordon:
Only the cost of transferred materials.
So if you donated a print to a charity auction, you can deduct the cost of printing.
If you give them a digital file on CD, you can deduct the cost of the CD. |
Well, what if I emailed them the photo?
Then I could deduct the cost of internet, my computer, and the electricity to run the computer.
;o)
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11/15/2006 08:41:04 PM · #24 |
Well, don't that just bite.
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11/15/2006 08:39:27 PM · #25 |
Only the cost of transferred materials.
So if you donated a print to a charity auction, you can deduct the cost of printing.
If you give them a digital file on CD, you can deduct the cost of the CD.
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