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OTHER ITA SITES:
Being A Writer Is So Taxing
For many writers the idea of trying to figure out how to manage taxes related to writing is laughable because they are still dreaming of selling their first article, story or manuscript. However, you may well find yourself receiving payment for your writing one day – and when you do, it's important to know some tax basics as they relate to writing.
In America all income is taxable and that includes income from writing. Some writers will file as a sole proprietorship business although this is not always necessary.
The IRS is primarily looking for a profit/loss statement. In effect, they want to know how much you made with your writing and how much you spent to conduct your writing.
The first year I had income from my writing I simply provided my tax preparer with all receipts from my income without providing any deductible receipts simply because I had no idea about what was deductible.
I've learned a few things since that time.
Did you know?
You can deduct the costs of paper, pens, pencils and other office products related to your writing?
You can deduct the value of your home office (only the actual room you use - figure out the percentage of the home it takes up and derive a cost associated with the use of that room for your business).
If you purchase a new computer you can deduct the percentage of the total use of the computer for writing related work.
You can deduct the actual cost of tax preparation in associated with your writing.
If you make less then $400 annually in writing you can claim the income in the 'miscellaneous' category on your IRS 1040 form.
Deductions can also be made for postage, professional memberships, writing conferences, and publications that deal with writing.
Schedule C is the form you would use to list your deductions.
Should your deductions exceed your income it is possible the IRS will claim that writing is simply a hobby. Since losses associated with a hobby are not deductible it may be advisable to only claim deductions that do not exceed your actual writing income.
You should keep records of your writing expenses and deductions for three years. Your receipts should be saved in the event of an audit.
This article is presented as general information, for full details and to gain specific insight on your rights and applicable deductions contact your tax preparer, accountant or the IRS.
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