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Professional and semi-professional American photographers might soon face a new set of administrative and accounting requirements that could bury them in tax paperwork – unless they act now. As part of the new healthcare reform legislation approved by the U.S. Congress this year, business owners must now report to the IRS on an income tax return any amount over $600 they paid to a company or individual and also submit a 1099 form to that company/individual as well.
In simple terms this means if you purchased a new lens this year that cost let’s say $895, not only will you be reporting that on your income tax return but you’ll also have to submit a 1099 form to the company you bought it from. The new tax rule is meant to track cash payments and cut down on businesses that don’t report this income – and fortunately it excludes credit card transactions – but what it really does is place a massive burden on small business owners. For commercial photographers that might order catering on their shoots or make other similar payments totaling more than $600 in a year, filing a 1099 with each of these becomes excessively burdensome.
Fortunately, the IRS is asking for the opinion of business owners and the American Society of Media Photographers has organized an e-mail protest campaign to protect the interests of small business owners. All submissions must be sent in before September 29, 2010. If you’re an American professional or semi-professional photographer check out the campaign and send in a letter if you’d like to support the ASMP’s efforts.
UPDATE: Please read David McRee’s comment below for a much better explanation from a practicing CPA.