It’s true. These are the two things we can’t escape. So every year around this time I put on my day job hat to talk about taxes and how it pertains to aspiring/published writers. With the economy today it’s even more important not to miss any deductions.
Here’s the good news: You can claim your writing expenses on your taxes even if you are NOT published. If you have actively been pursuing a writing career, and can show query letters (via post or email) in case you are ever audited (highly unlikely) then this is proof that your writing is not a hobby. You can write off all/any expenses you have incurred.
You are considered a "sole proprietor" unless you choose to have some other form of business. A sole proprietor is just another way of saying "self-employed," "independent contractor," or "freelancer." Income and expenses are reported on your 1040, Schedule C. Take a look at it by going to the
IRS website.
Make sure you separate all writing income from other types of income you are reporting (easier if not published since it’s a big fat zero) and keep track of all your expenses by using a spreadsheet or financial software. Try to keep all of your receipts but don’t freak if you can’t find where you put them because a cancelled check or a bank statement can serve as backup.
The most relevant categories of expenses for aspiring/published writers are:
Advertising – this includes business cards and web-marketing.
Legal and professional services – Such as editing or proofreading fees.
Office expense – anything other than consumable routine supplies (those go in under supplies) this is more for items such as computer software or reference/writing books.
Repairs and maintenance – repairing your computer, for example
Supplies – routine office supplies like paper, toner, pens, pencils, notepads, etc.
Travel – the cost of traveling to a convention, meeting, or research trip.
Meals and entertainment – the cost of business meals, but be careful not to go overboard here as this is a common target in an IRS audit.
Home Office-If you have a home office, and it doesn’t have to be a separate room just a space used solely for your writing, then you need to calculate the square footage against the overall footage of your home. A percentage is deductible and so are all of your utilities. Most tax software will do this calculation for you.
Utilities –electricity, gas, water, waste removal.
Other expenses – such as Dues & Subscriptions, Website development, and internet connection as long as it’s used for writing purposes only.
If you have an expense that doesn’t fit into one of the other categories then put this under ‘Other Expenses’ as well.
Warning: The IRS likes to say if you report a loss for more than 2 years then this should be labeled a hobby but that’s not entirely true because it’s fairly normal for any business to have several years of losses before ever making a profit.
What this means is that you can write off expenses pretty much worry free for two years but after that you may be asked to prove you are trying new methods to increase your profit. It isn’t nearly as scary as it sounds. Just keep a list of your projects, any feedback or meetings with agents, contests you’ve entered, and all the conferences you attended.
I think that’s it for this long, rather boring post but please feel free to research this topic further on your own if needed.
Good luck and may your taxes not directly lead to your death! Because that would suck.
