Last minute tax tipsPosted: April 11, 2011
Disclaimer: I’m not an accountant; I’m a writer, but my husband used to be a professional tax man and he taught me a lot.
I hope this blog is coming after the fact for most readers. I hope you have finished your tax returns, sent them in and collected your refunds by now. But if you haven’t, or you weren’t too happy with the results, here are a few words of wisdom.
If you make money with your writing, you are supposed to report it on your tax return. If you make more than $600 from any one publisher, they will be reporting it to the IRS, so you need to report the income. If anybody pays you royalties, they will also be sending a form to the IRS. Even if you don’t make much money, you should list your income, not only because it’s the right thing to do, but to show that you’re seriously working at your writing and so you can deduct your expenses.
If you’re writing for publication, you can claim your writing expenses on Schedule C, the form for small businesses like yours and mine. The things you can claim include: office supplies, Internet connection fees, postage, travel for interviews, tuition for classes and workshops, publications you buy for your business, contest entry fees, and more.
To verify these expenses, you need to keep receipts and keep records, either on paper or on the computer, for every work-related expense and every work-related mile you drive. It doesn’t have to be complicated, and it doesn’t have to take a lot of time, but you need to do it.
Note that most accountant types are not writers and don’t really understand our financial situation, so we have to be ready with clear records, whether we do our own taxes or pay someone else.
People often wonder if they can still deduct writing expenses if they’re not making a profit. The answer is yes. Ideally you should make a profit within three years, but if you don’t and you can show that you are working hard at it, that you have a “profit motive,” you should be all right.
For more tax advice, read Bonnie Lee’s Tax Advice for Writers at the writersdigest.com site. You might also want to get the Writer’s Pocket Tax Guide. Updated every year, it’s available as an e-book, if you’re in a hurry.
Good luck. Get it done, so you can hurry back to writing.