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I was all set to do some nice photo post tonight. Promise. And then my tax accountant called to say my taxes were ready to be picked up. Tra la la...left to go pick them up. Not concerned about it really, since every year I plan my withholding to get about $5-6,000 back in refunds. In fact, April is usually a happy time for me since it feels like a governmental gift (yes, I know it was my money to begin with). But, I hate the idea of stressing about how much I might have to pay in April...so over-withholding is my coping mechanism.
The accountant's assistant handed me my folder and showed me the front page summary. She said something about estimated quarterly taxes next year and then said that $367 had been "applied to the first quarter 2009 tax payment". My mind blanked. It was as if I went instantly stupid. Why was she talking about some sum of money as small as $367? And why, for heaven's sake, did it sound like that small sum would be going to the government instead of me? Was this an April Fool's Day joke?
Yes, I knew I would have to pay a little more this year in taxes...but I had no idea that is would mean a nearly $6,000 difference to me! Being a small business owner, my estimates at taxes are a little difficult. A lot depends on how much I spend (invest) on my business. Some years my needs are less, so I have less deductions. Some years people buy more, so my taxes will go up. I guess this was a year with less deductions and more income. Perfect storm of tax-UGHHHH.
Which then brought me to the thought of my upcoming Sales Tax payments. Let me rant a little bit about that one. Do you know why I have to charge sales tax? Most people assume that a "service" or "labor" cost is non-taxable, since that is usually the case. LUCKY ME! Photographers in the State of California are *different*. I have to collect sales tax on ALL of my services if ONE SINGLE TANGIBLE GOOD results from that work. So I asked the State when I started my business "But what if all I delivered was a CD with digital files on it? Is the whole package taxable?" The State told me "The CD is a tangible good...whole thing is taxed." So I asked another way "What if I had a separate charge for the photography vs. deliverable goods? Can I only charge sales tax on the deliverable goods aka CD?" The State said "No...the service is also taxable if anything tangible is produced as a result of the service. It is all taxed." With a brilliant thought in my head, I asked a final question "Well, what if I posted the digital files online and the clients downloaded them electronically? Would that be considered taxable?" The State said "Nope. No tax on that. There is no tangible product since it is all electronic." I was so excited. I immediately started thinking about how I'd set up an electronic file transfer system for clients and in that way be able to save them a few hundred dollars. BUT...ugh. I was reminded by the State guy that if Aunt Betty bought one single 4x6 print, then the clients would be responsible for the entire sales tax amount still. And in parting, he warned me "We can do an audit on things like that. It would raise red flags if you had a large income and little sales tax burden as a photographer." I passive aggressively flipped him off on the phone and said sweetly "Thanks?".
So, with these tax-related angst thoughts all jumbled together, I was spinning. I told the lady at the accountant's place that they should have Voter Registration forms, too. So when people pick up their tax returns they can instantly switch their party affiliation to Republican. And, they should have some stickers from the blood bank that say "I gave today. Be kind to me." Possibly a barf bucket too?
I came home hopeful that my family would wash away the yucky feelings floating inside me. I heard Holly and Anna playing happily in the backyard together. I started a little smile and asked Jason how long they'd been out there. He said they'd been out there for at least an hour. WONDERFUL! I loved it...and then I heard Holly run up to the sliding glass door and announce "Mom, I accidentally pooped in my pants."
To be honest, I answered back "Yeah, honey so did I." Mine was just metaphorical. Her's...I had to clean up.
The accountant's assistant handed me my folder and showed me the front page summary. She said something about estimated quarterly taxes next year and then said that $367 had been "applied to the first quarter 2009 tax payment". My mind blanked. It was as if I went instantly stupid. Why was she talking about some sum of money as small as $367? And why, for heaven's sake, did it sound like that small sum would be going to the government instead of me? Was this an April Fool's Day joke?
Yes, I knew I would have to pay a little more this year in taxes...but I had no idea that is would mean a nearly $6,000 difference to me! Being a small business owner, my estimates at taxes are a little difficult. A lot depends on how much I spend (invest) on my business. Some years my needs are less, so I have less deductions. Some years people buy more, so my taxes will go up. I guess this was a year with less deductions and more income. Perfect storm of tax-UGHHHH.
Which then brought me to the thought of my upcoming Sales Tax payments. Let me rant a little bit about that one. Do you know why I have to charge sales tax? Most people assume that a "service" or "labor" cost is non-taxable, since that is usually the case. LUCKY ME! Photographers in the State of California are *different*. I have to collect sales tax on ALL of my services if ONE SINGLE TANGIBLE GOOD results from that work. So I asked the State when I started my business "But what if all I delivered was a CD with digital files on it? Is the whole package taxable?" The State told me "The CD is a tangible good...whole thing is taxed." So I asked another way "What if I had a separate charge for the photography vs. deliverable goods? Can I only charge sales tax on the deliverable goods aka CD?" The State said "No...the service is also taxable if anything tangible is produced as a result of the service. It is all taxed." With a brilliant thought in my head, I asked a final question "Well, what if I posted the digital files online and the clients downloaded them electronically? Would that be considered taxable?" The State said "Nope. No tax on that. There is no tangible product since it is all electronic." I was so excited. I immediately started thinking about how I'd set up an electronic file transfer system for clients and in that way be able to save them a few hundred dollars. BUT...ugh. I was reminded by the State guy that if Aunt Betty bought one single 4x6 print, then the clients would be responsible for the entire sales tax amount still. And in parting, he warned me "We can do an audit on things like that. It would raise red flags if you had a large income and little sales tax burden as a photographer." I passive aggressively flipped him off on the phone and said sweetly "Thanks?".
So, with these tax-related angst thoughts all jumbled together, I was spinning. I told the lady at the accountant's place that they should have Voter Registration forms, too. So when people pick up their tax returns they can instantly switch their party affiliation to Republican. And, they should have some stickers from the blood bank that say "I gave today. Be kind to me." Possibly a barf bucket too?
I came home hopeful that my family would wash away the yucky feelings floating inside me. I heard Holly and Anna playing happily in the backyard together. I started a little smile and asked Jason how long they'd been out there. He said they'd been out there for at least an hour. WONDERFUL! I loved it...and then I heard Holly run up to the sliding glass door and announce "Mom, I accidentally pooped in my pants."
To be honest, I answered back "Yeah, honey so did I." Mine was just metaphorical. Her's...I had to clean up.
Uncle Sam has been a bit of an A*Hole this year, hasn't he?
(04.01.09)Okay the last two paragraphs just made my night. I SO needed that laugh today. Thank you! LOL
(04.02.09)I here ya on all fronts. I hate taxes. I to try to pay more and then get shocked each year when I don't get as much of MY money back as I think I should. Finally I too had a daughter who pooped her pants today, sigh...
(04.06.09)