For Stock Photographers... The Work-at-Home Advantage

Are you missing out on tax deductions that could be yours?

If you are a photographer, you probably fall into one of three categories:

1.) You are self-employed and photography (whether stock, portrait, wedding, commercial, or a combination) is your sole source of income.

2.) You are employed in a separate job or profession and your stock photography is a sideline business.

3.) You are employed as a photographer on staff by a company. The "Home Office" laws have always been difficult for independent stock photographers to interpret. Almost 75% of us work out of our home office and fall into either category 2 or 3 above. To get a clearer picture of how we qualify (or don't qualify) for a home office tax deduction, we spoke with tax columnist and lecturer, Julian Block, who is author of the popular book, "Julian Block's Tax Avoidance Secrets."

Q: Is there any class of work-at-home photographers who definitely qualify for 100% of deductions available to a business?
A: If a description of your stock photography operation falls into the first category above, you are entitled to any and all applicable tax business deductions* that any business, including large ones, are entitled to by law. However, if you work at home, the present IRS regulation says that more than 50% of your time engaged in that business must be conducted in your home to qualify for home office deductions.

Q: Just when is it that a work-at-home person does not qualify for home deductions?
A: When you hear about tax deductions that are not available to work-at-home persons, the rulings generally apply to people who spend most of their working time away from their home office. The IRS figures those people should not be entitled to a home office deduction if they are rarely using the home office-that in such cases claiming home office deductions is an abuse of the tax regulations.

Q: Please explain the Soliman case, where the Supreme Court decided that the IRS was correct in requiring that to qualify for home deductions a person must conduct his or her work at least 50% of the time in the home, not in the field or elsewhere.
A: The court ruled that persons who maintain an office at home are not entitled to office-at-home tax deductions unless more than 50% of their actual working time is spent in that home office. This is regardless of whether they have or don't have an office elsewhere.

Q: Does this mean that if a photographer is not employed elsewhere, the Soliman case does not apply?
A: No, the 50% rule still applies to photographers whether they are photographers employed elsewhere as a company photographer, or they are operating a business at home, even if it is their sole source of income. Even if it is your only business, 50% of your work time must be spent in your home in order to get the home office deductions.

Q: Just what are the home office deductions a person would qualify for?
A: If you are putting in 50% or more of your work time at home, you are entitled to deduct the percentage of your home that is used for your business. As example, if you conduct your business from a room at home that is one-eighth the size of your home, then one-eighth of the expenses to maintain your home are business expenses (heating, air conditioning, lights, cleaning, etc.). All of the office equipment, and other materials related to your business, are, of course, deductible.

Q: What if you don't qualify for the "home office" deductions you just mentioned- are you entitled to regular business deductions?
A: You are still entitled to standard business deductions such as telephone, film, cameras, office equipment such as computers, software, fax machines, etc. even if you are working less than 50% of your time in your home. Of course, if you rented an office across the street or across town, all the office maintenance expenses can be considered a deduction on your Schedule C, including the cost of renting your office.