Tax season isn’t exactly looked upon as a time of celebration. Most of us wait until the last minute to begin sorting through receipts stuffed in a drawer or a box, and then panic as April 15th approaches. Don’t be that person. Be prepared.
For the unpublished writer who thinks they don’t need to file writing-related taxes, think again. The IRS rules state that you can claim a tax loss for business expenses if you are unpublished; as long as you can prove you are actively pursuing a career in writing, and as long as the expenses are considered necessary businesses expenses, they are deductible. However, always check with a tax expert before filing, because the IRS does have a habit of changing their rules.
For newly published authors, and perhaps a few veteran authors who are wondering what you can and cannot deduct, perhaps this list of suggestions will help.
- Track your expenses: create a simple spreadsheet in excel or if you’re not familiar with excel, use the “Tables” section on your computer.
- Use a large manila envelope to store your receipts. For cash register receipts, the IRS suggests you make a copy and staple the receipt to it, because the ink on receipts fade.
- I don’t suggest scanning receipts into your computer unless you have an excellent cloud account. Be aware that the IRS will want printed copies with original receipts–especially if they decide to audit you.
- While there may be more items writers can deduct, this list will get you started:
- Advertising and Promotion (brochures, flyers, press kits, press releases, book marks, etc)
- Business cards
- Books donated to libraries or given away for promotional purposes, or to another author, donated for fund raisers, etc) may be deducted at retail value.
- Books purchased for research
- Cable modem
- Computer maintenance and repairs
- Cell phone (only if you can prove it’s for business and not personal use)
- Computer (writing) software
- Conference and Meeting fees
- Contest Fees
- Contest Prizes to winners of your books
- Gifts to your Street Teams
- Meals (non-travel)-these are treated differently than travel meals on your taxes, so you need to keep them separate.
- Meals (conference, workshop, etc)
- Other (tips for maid service, food servers, parking valet)
- Office Supplies
- Postage (for books sent to winners, readers, reviewers, etc.)
- Professional Education fees
- Professional Membership fees
- Research fees
- Mileage (to the event and the return trip home) *The IRS is adamant about proof of mileage. Keep a small notebook in your vehicle to record the date, the distance traveled(you could record beginning and ending odometer readings or the actual measured distance),, and the purpose of the trip (e.g. bought supplies, attended a writers’ meeting or workshop, book signing, etc.)
- Cab and car rental
- Tolls & Parking fees
- Website design and hosting
- Monthly internet fees
- Dry cleaning (for those nice clothes you wear to conferences, or speaking engagements, book signings, or other author appearances)
- Agent fees and commissions
- Pay a housekeeper or babysitter so you can writer (Check with the IRS: you may have to file a 1099 for this, especially if it’s over $600 for the year.)
- Vacation (this one is iffy, so be careful. Check with a tax expert.): combine this with a little networking by visiting a local writers group, or visit the library, museum, or any other place that you could claim as research. Talk to celebrities, authors and media about your book even if it’s not published. Collect business cards as verification that this was a “a working” vacation.
What if you are e-published or/ self-published?
Consult with a tax expert to see if you need to file a 1099 since you are essentially self-employed and may be employing cover artist, professional editors, formatters, etc.
- Set-up fees
- Cover art
- Occupation or resale license fees
- The charge for producing (or buying the books)
Remember, if it falls under “Necessary Business Expense,” it is deductible.
While the IRS says you can deduct your home office, there are specific rules. Check “Home Office Deduction” IRS.gov However, as it was explained me by a tax expert, if you claim your home office as a business expense, and if you ever decide to sell your home, this could actually devalue your house, and may come under a zoning requirement e.g. residential-commercial. Again, because the rules change from year-to-year, check with a tax expert or contact the IRS (get it in writing.)
If you are worried about being audited, then be careful and be honest. Claiming you hired a baby sitter so you could go out on a night on the town supposedly to research how to learn to dance may not cut it with the IRS.
Disclaimer: I am not a tax expert, and this article does not replace the services and/or advice of a qualified tax professional who has the opportunity to look at your individual tax profile and circumstances and render advice accordingly.
Remember, tax laws change yearly. For more information visit the IRS firstname.lastname@example.org or call them toll free at: 1-800-829-1040.
The bottom line is, it’s never too early or too late to get organized for tax season.
Loretta C. Rogers
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