Government funding and tax deductions for photographers in 2021

For photographers around the world, the wedding and portrait season of 2020 embodied expectations that did not correspond to reality. Between COVID-19, major elections, and all manner of social and political events, the photography season just hasn’t gone as planned. Fortunately, there are a few government relief programs, tax incentives, and other strategies you can take advantage of to help shore up the tidal wave of losses that you, or a loved one, have likely suffered, or more likely keep on going to discover.

[Read: 10 Important Tax Hacks For Photographers]

Government funding: Paycheque Protection Program

The federal government has opened a second round of funding for its Paycheck Protection Program (P3) which is available to small businesses, including “sole proprietors,” which is the tax structure many photographers find themselves in. of marriage. There are many resources that describe the specifics of the PPP qualification, but the general highlights are as follows:

If this is your first PPP loan, you are eligible if:

1.you were operational before February 15, 2020 and are still operational at the time of application

2.you are small (less than 500 employees)

3. the current economic uncertainty (hum, marriages canceled) makes a PPP loan necessary to maintain your business.

[Read: How to Manage Money for Photo Business Longevity]

If this is your second PPP Loan, most of the above conditions apply except you must be able to prove that you had a 25 percent reduction in your gross income. By the way, “gross” is income before expenses.

The great thing about these loans is the possibility of getting them (relatively easily) forgiven. There are a handful of criteria that must be met to be successful in making them forgive, but the rules are written in favor of small businesses, especially in an industry like ours that has been hit so hard by the pandemic.

Applications are open now, and you are applying through your bank. One of my favorite resources for unraveling all this chaotic tax policy is The Bench Accounting blog.

[Read: 4 Crucial Tax Tips for Photographers Who Live and Work in Different States]

Government funding: economic disaster loan

Another government funding option is the Economic Disaster Loan (EIDL). Unlike PPP, it is more of a conventional loan without any surrender clause. The advantage, however, is that the amount you can claim and receive is a lot higher than the PPA. The loan terms are also very generous compared to other options, with very low interest rates and very long repayment terms.

Read how to apply to EIDL of the Small Business Administration.

Government funding: Extended unemployment insurance

Rules vary from state to state, but for some states, including my home state of California, you don’t have to be a paid photographer to receive Unemployment Insurance (UI) . You can also apply for unemployment insurance as an independent contractor or “concert” worker. In addition to state benefits, the federal government injects an additional $ 300 per week.

[Read: What Does the New Tax Bill Mean For Your Photo Business?]

Keep in mind that any benefits received are taxable, so opt for withholding tax up front, or just remember that a portion of the benefits will have to be paid in the form of taxes next April.

Find out how to apply from the US Department of Labor.

Government funding: employee retention credits

If you have employees, the employee retention credit is extended for an additional six months, until June 2021, and the amount increased from 50% to 70% of an employee’s salary.

There are, of course, a handful of details to explore, but know that it’s here to start. Here is an IRS guide on claim the credits.

President Biden’s American rescue plan

More than any other year, the availability of government programs is changing rapidly. The second round of PPP funding wasn’t even a thing until the dying days of 2020 and then all of a sudden it passed and kicked into action. The White House has already proposed a new spending bill that will expand all kinds of opportunities for small businesses to seek help to help stem the financial losses associated with COVID-19, known as COVID-19. American Rescue Plan (ARP).

Nothing is final until it is final, so the main thing to remember is: stay informed.

For the record, I heard that so many fellow photographers were unaware that the first round of PPP funding, EIDL or even unemployment benefits were available to them until the funds supporting these initiatives were available. virtually all of them exhausted or expired. I think the chatter around the virtual water cooler from fellow photographers woke up a lot of us, and I’m grateful to see a lot more friends tuning in to this second round of stimulus payments. That being said, much of that money is free or cheap, and it’s important to stay up to date and informed during this season.

Brandon scott is a wedding photographer and CPA based in Monterey, California.

Source link

About Anne Wurtsbach

Check Also

Goals for Norwich City forwards Sinani and Drmic

Danel Sinani’s return to form continued with a goal and victory with loaner club Waasland-Beveren, …