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Should a Photographer Charge Sales Tax?

April 22, 2015 - Business, Photography

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Dear Jasmine,
We started our own photography business last year and we just went through and filed for an LLC. With that being said, I have been reading a lot about charing tax as a photographer. Some people say you don't need to if you aren't physically handing your client a product like and CD or a thumb drive. I don't want to get an awful surprise of owing the IRS a bunch of money at the end of the year without realizing I was setting myself up for that.
How much sales tax should a photographer charge to make sure they are covering themselves? Should a photographer charge the tax on top of their cost or integrate it in their packages? 

Sincerely,
Scared of the IRS

Dear Scared,
When I first started, I asked the same questions…and I didn't get the same answer. I asked my bookkeeper, my accountant, and other photographers, all yielding various opinions. Here's what I *think* is the case: technically, if a photographer isn't handing over a physical product (like a disc or USB with the photos), sales tax isn't applicable. BUT (and this is a big but), if at any point in time throughout the duration of the business relationship a client purchases a print, disc, album, etc. and it's supplied by you, then you must pay tax on the entirety of the package price, not just the physical product. (Yes, I asked if my clients could just pay tax on the album and the answer was a hard no.)

That's a slippery slope if I've ever seen one. What this basically means is that if a client just wants a photographer to shoot the wedding and deliver the digital photographs online (with no physical product options), but–perhaps–decides a year later to purchase an album, there's a ton of residual tax to pay in relation to your services.

Because the law is ever-changing and it's just barely catching up with technology, there's a good chance sales tax will soon be applicable on digital products as well. As a result, I've made the decision to charge my clients tax because most my clients order an album. I charge it in addition to the Collection price, but you can easily incorporate it into your prices (it's personal preference).

Each state and county have different tax rates, but here's an amazing tax calculator that helps you figure out your rate according to zip code and sale price.

I wish you the best and next time we see Uncle Sam, we won't fear the beard!
Taxes, schmaxes,
j*

**UPDATED TO ADD**
I am not a tax lawyer or CPA…I'm just a photographer trying to run a business in California. This post was merely MY experience based on almost 10 years doing this…but to be certain you're filing correctly, check with a CPA in your state to ensure you're doing everything correct. I've been notified that lots of states charge tax for digital products, so it's best to ensure you're charging tax as needed.

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