Re: Income and selling prints / etc. at tax time

Another thing to consider is that many insurance companies consider that
if you make any money from photography, your photographic equipment is
not covered as part of your homeowners policy, but a separate schedule
or a business policy could be added for additional premium. This is
independent of whether the photography is a business or not. If it is a
business, you may only have liability coverage through a business policy
(something else to consider.)

As to taxes, remember the sales/use tax which may have different rules
for each state. This is separate from income and does not involve the
federal IRS but does involve the state (although one should file the
income schedule C to separate the business stuff). And this might be any
state in which you make a sale. Generally states do not collect what
other states do so mail order typically goes to the state where shipped
from. Although caution should be observed in that if one state has a
higher sales tax than another, they may require the difference to be
paid. These taxes are typically filed quarterly or monthly depending on
the amount owed. And once registered, one must file each period even for
zero amounts due. With a gallery, the sales tax is collected, reported,
and the responsibility of the gallery (the one making the sale.) Also
note that galleries may have very different responcibilities to artists
as per their state laws. It doesn't hurt to understand how to write a
good contract when using a gallery or agent.

Be especially careful of the use tax. Some think that if they have a tax
number that they can buy everything sales tax free. This is not the case
and generally only applies to materials that are part of the product
sold. For example: If one is selling Pt prints on paper, they could be
exempt from paying sales tax on purchases of the paper and Pt chemistry.
However, they may not be able to exempt the sales tax of the film or
camera. (These taxes can be added to the equipment cost and depreciated
or added to the material cost and deducted from income as per IRS
rules.) And like the sales tax, if the use tax is higher than the sales
tax paid, then the difference is paid as use tax (it doesn't work the
other way giving a refund, sorry, but that part may be deductable from
income.)

If you search your state's web site for taxes and running a business,
you will likely find all the rules and stuff you need to know. But any
questions or doubt should be directed to a competent, qualified tax
professional as suggested by others. Although there have been some
stories in the news about tax businesses cheating the system. Bottom
line is one is still responsible and would have to go after the tax
professional if there is a problem.

As to errors: with income there is the schedule X. But for sales and
use, a failure to file even a zero return can have significant penalty
(sometimes one may be able to plead for mercy if they forget a return
and do not owe anything.)

Bottom line is that an artist selling their work should take it upon
themselves to learn how to opperate as a business. As Bob has suggested,
those working in the government revenue departments can be very helpful.
And all can be found on the web these days.

-- 
Jeffrey D. Mathias
http://home.att.net/~jeffrey.d.mathias/