Common I.R.S. Red Flags for Photographers (and How To Avoid Them)

Photographers love to call attention to themselves. When it comes to their images and their photography business, this can be a great thing – as long as it’s not from the Internal Revenue Service (IRS.) Many photographers make mistakes in bookkeeping and record keeping throughout the year, creating obvious red flags on their tax returns.

Matthew T. Whatley, is a San Francisco-based tax expert and attorney better known as “The Tax Ninja.” He specializes in tax preparation for small and medium-sized creative businesses (like artists and photographers). I recently interviewed him for the new report “Starting A Photography Business” created by the PhotoShelter Research Team. The report, a free download, shares advice from experts (like Whatley) and recent College Photographers of the Year.

He says that the IRS is very clear on what they consider to be a legitimate expense.

“The rule for the IRS is that the expense is ordinary and necessary to the generation of income for the photographer,” Whatley said.

“If the photographer is unable to actually justify that the expense was necessary for them to do their business, then that’s going to be something that is not going to be allowed if they are audited by the IRS,” he said.

What are some common expenses that may raise a red flag for a photographer?

• Something that’s a very large expense and seems out-of-place for a photographer.
• Really large home office expenses.
• Mileage expenses that are out of place (without documentation.)
• Office supplies without paper receipts.

In the video (above), Whatley goes into detail on each of these points, and offers suggestions on how to avoid throwing up a red flag the next time you file your tax return.

Learn more by downloading our free guide “Starting a Photo Business”