By Stacey Graham
The joys of being self-employed: the lazy hours of research, optional pants days, eavesdropping on heated conversations at coffee shops. Just remember we all pay for it in the end. Taxes, my friend, eventually rear their ugly head. All right, come out from under your desk, if you go into tax season prepared and organized it only hurts a little. Luckily for us, tax season comes every few months with our estimated quarterly taxes. Excited? Yaaay.
So how does one gird their loins before ponying up to the IRS? Let’s determine what qualifies a writer. No, not elbow patches. Not even a cat. It’s intent.
Professional Writer vs. Hobbyist
We all start out with visions of nice fat advance checks in our pockets after an appropriate amount of hard work getting our writing into the public’s hands. If you publish with the intent of making a living as a full-time writer, you will need to file a Schedule C and take deductions to offset the self-employment taxes incurred by having to pay state and federal taxes plus Social Security and Medicare taxes. That’s right. Let it wash over you. Feel the love.
If you claim status as hobbyist, with little intent to make a profit from your work, know that taking deductions may get you the stink-eye from Uncle Sam if there is not proper documentation. When in doubt, go overboard: staple credit card receipts for hotels, meals, and registration for workshops to conference receipts to prove you were there specifically for that purpose and not a swanky vacation. Hobbyists are not allowed to claim deductions in the excess of the amount they made that tax year.
Not scared yet? Good. You’ve got moxie, kid. I like that.
Begin as you mean to go on: Treating your writing as a business
Nothing gets my attention quicker than an author with a business plan. I don’t mean pie charts unless it’s actual pie, but recognizing the importance of being an entrepreneur in the publishing business already sets you apart from the rest. Do your research, get the business license and zoning issues taken care of, print the business cards and attend the workshops, advertise your upcoming books, and do those blasted interviews when you know only truckers will hear it in the middle of the night. It’s worth it in the end.
To make tracking your income easier, use a program such as Quicken, Quick Books (I see a trend here), or Excel to mark what’s going in and out. Organization now saves time and money in the future.
Pro-tip from Rachelle Gardner: Open a checking account solely for writing expenses and royalty checks when they come rolling in. Save 20% of each check to put toward quarterly taxes due April 15, June 15, September 15, and January 15 to offset a huge tax on April 15th, and pay the tax for that quarter as it comes in.
Deductions
Some deductions include typical writing expenses such as office supplies, printer ink, copiers, computers contest entry fees, stock photos, membership fees for writing organizations, advertising, hotel fees for conferences, and research materials. Think before you jet off to the Bahamas on “research” however, you may be flagged for an audit if you can’t back up why you ate your weight in conch fritters.
Keep all receipts for seven years. Write down which conference you were at on the back of food receipts because I promise you won’t remember in five years unless some sorcery is involved.
Famous deductions that may get you the side-eye
Home office: This space can only be used for writing so you can’t deduct the cost of your kitchen table or favorite chaise. (Something about going ahead with the deduction if you use it for full-time work.)
Travel: Keep detailed receipts when you’re on the road by tracking mileage, etc. If you’re audited, you’ll need to back up when and where you were during business trips for book signings and interviews.
For more information on taxes and deductions, please visit the fine folks below
Get the 4-1-1 on Self-Employment Taxes
Taxes for Writers
Tax Advice for Writers
Tax Deduction Tips for Writers
Top Tax Tips for Writers
IRS.gov : Tax Guide for Small Business
Note: I am not a tax consultant nor expert. While this post is meant for basic advice, it doesn’t come close to the complexity of the laws that cover authorship and taxes. Each writer should consult with a tax professional before submitting to make sure all bases are covered with up-to-date tax laws in their state and with the federal government.
Stacey Graham is the author of four books and a rag-tag collection of short stories. You may currently find her scaring the pants off of readers with her latest book, Haunted Stuff: Demonic Dolls, Screaming Skulls, and Other Creepy Collectibles. She intends on returning the pants at a later date. Please visit her at her website at staceyigraham.com, at Twitter @staceyigraham, or on Facebook at facebook.com/authorstaceygraham
