Make sure to watch out for these common IRS tax audit triggers for photographers. I spoke with my tax accountant about some of the most common red flags for getting audited as a self-employed person. You definitely want to safeguard yourself from an audit of your taxes by making sure you have all of the following things taken care of!

8 Tax Audit Triggers for Photographers

Fraudulent claims of the Earned Income Tax Credit (EITC). This is a credit given to people who are within a low to moderate level of income.
Under-reporting your actual income — income qualifies as any amount of money, even if it’s $20 bucks someone passed you for editing a picture. Income that you receive that you don’t receive a 1099 also must be claimed. This includes cash, checks, and digital forms of payment including but not limited to: PayPal, VenMo, Facebook Pay, etc.
Claiming contractor expenses without actually filing a 1099. Remember you’ll want to keep track of anyone you pay out, but you’ll need to 1099 them if they get paid more than $600 within a year.
1099s not aligning with amounts reported as revenue to the IRS. This includes 1099s that you’re sending to contractors and 1099s you receive from contractors.
Abundant Tax Write Offs — Listen, you should claim every single deduction you can, but the very nature of doing so does make you more susceptible to an audit. This is because people have a tendency to over-claim deductions of home office, business expenses, depreciation, etc. Claim these deductions, but make sure you have the receipts (literally and figuratively). Also make sure you’re familiar with the rules surrounding each of these write-offs. For example, your home office must have an actual door and should only be used for business purposes.
Excessive Charitable Donations — Again, if you’re giving to charity then claim that as a deduction on your taxes. Excessive amounts of charitable donations do raise eyebrows over at IRS offices, though. Make sure when you’re donating that it is a 501(c)(3) organization.
Being Abnormal in Your Claims — Anything that falls drastically outside of average business income and expenses across the country could be considered a red flag for the IRS.
Making the Big Bucks — If you’re bringing in lots of cash, props to you photog. Unfortunately, this also puts you on the IRS’ radar. As long as you’re accurately reporting expenses and deductions, you’ll be OK. If your business is booming and you have a sudden drastic increase in income, this tends to flag the IRS. It’s ok though! Just keep track of everything!

Tax Tips for Photographers

Here’s a few of our tax tips that can help you when filing your taxes!

Keep Your Business and Personal Expenses Separate

Get yourself a credit card or a separate bank account that’s dedicated entirely to your business. Make sure to pay business-related expenses with your business account. This will streamline your organizational process by a million. Not only that, but in the off-chance you do find yourself audited, your auditor will really appreciate that you’ve separated everything.

Never Risk a Write-Off if You’re Unsure About It

This may make you say, “Duh,” but it bears repeating: If you have any question in your mind on whether or not something is a tax deduction or write off, hit up your CPA. Do not leave something so minor (or major) to chance. Trust me on this.

Keep Scrupulous Records of Subcontractor Expenses

In the same way you keep track of receipts, it’s also import to keep track of what you’re paying out to others. This includes assistants and second-shooters specifically, but if you’re paying anyone else regularly — such as consultants, marketing specialists, business mentors, etc. — that counts, too.

These records must be scrupulous, so keep track of every single payment made, including to whom, the date, how much, and for what service. Should you get audited, you’ll need to provide clear, detailed information regarding what these sub-contractors did for you. At the end of the year, you’ll need to send a 1099 to each person you pay if they made over $600. You have a certain deadline you have to do this by every year — usually the last day of January. The 1099 is essentially the subcontractor’s way of receiving a W2.

I also recommend having a contract with every subcontractor you work with. If the IRS audits your subcontractors, they prefer to view a contract between you and this person to know what their exact details were of their business dealings with your company.

Hire a Legit Professional (Yes, It’s Worth the $$$)

Always, and I do mean always, hire a tax professional to do your taxes. They’re not cheap, but just like a delicious piece of chocolate cake they are worth every single penny you spend.

Want a way to keep track of your taxes that takes the hassle out of everything? Check out our Taxes Made Easy For Photographers over on the BP4U store. Use code TAX30 to save 30%! Here’s what all you’ll receive:

It includes the following:

A Comprehensive Tax Guide for Self-Employed: “My IRS Woes Are Your Gain: Everything I Learned From Being Audited Twice.”
A Mini Guide that outlines 445 often overlooked photographer tax deductions
Tax Spreadsheets made by a professional tax accountant to help you stay organized through the year (compatible with newest tax laws). Unlike our original, this one includes lifetime summaries and can be used year after year.
Tax Estimate Generator — This is pulled from data you input yourself, including income, expenses, and location. (Note this is an estimate only, but that it can help you more adequately prepare for your estimated quarterly payments and final tax bill.)
Goal Tracking Spreadsheets — stay motivated!
Written and video tutorials to walk you through the spreadsheets